2025-2026 Regular Session HB 1649 PN 2003 Bill Text (HTM)

PRINTER'S NO. 2003

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1649

Session of

2025

INTRODUCED BY FINK, STAATS, BARGER, ZIMMERMAN, ROAE, COOK,

ANDERSON AND RYNCAVAGE, JUNE 24, 2025

REFERRED TO COMMITTEE ON FINANCE, JUNE 24, 2025

AN ACT

Amending Titles 53 (Municipalities Generally) and 72 (Taxation

and Fiscal Affairs) of the Pennsylvania Consolidated

Statutes, eliminating school district property taxes;

imposing county and school district taxes; establishing the

School District Emergency Fund and the School District

Property Tax Elimination Fund; consolidating Articles II and

III of the Tax Reform Code of 1971; in preliminary provisions

relating to sales and use tax, providing for definitions; in

taxation generally relating to sales and use tax, providing

for exclusions and for transfer to county sales and use tax

accounts; in preliminary provisions relating to personal

income tax, providing for definitions; and making repeals.

This act may be referred to as the School Property Tax

Elimination Act.

The General Assembly finds and declares as follows:

(1) School district property taxes are a fixed expense

for property owners, which creates an unsustainable and

regressive system of taxation impacting our fundamental

rights of life, liberty and property. School district

property taxes are not reflective of a property owner's

ability to pay and are regressive in nature.

(2) The current rate of increase of school district

property taxes is unsustainable due to factors frequently

beyond the control of local school officials and school

boards, including underfunded pensions, rapidly escalating

health care costs, more complex educational requirements for

students and unfunded mandates.

(3) School district property taxes impact individuals

differently. For example, if spouses are retired and one

spouse passes away, the income reduction caused by the death

is immediate, but the school district property tax burden

remains unchanged. Other factors impacting older

Pennsylvanians' ability to bear the burden of school district

property taxes include the amount of financial assets in

retirement, health, mobility and the proximity of family

members. School district property taxes are problematic for

working families as well, with young working families bearing

the brunt of funding the State while managing such financial

burdens as income taxes, exploding health care coverage costs

and day care expenses.

(4) This Commonwealth faces an additional risk through

its tax structure and limited job creation, as young working

families continue to relocate from this Commonwealth, partly

as a result of Pennsylvania's tax system being specifically

geared to taxation of income from working citizens, with

retirement income not being taxed.

(5) The Independent Fiscal Office reports that

Pennsylvania is attracting more seniors as residents because

of the tax status in this Commonwealth of retirement income,

particularly when compared to neighboring states.

(6) The demographic changes to this Commonwealth, fueled

by the combination of the exodus of younger people from this

Commonwealth and the migration of older people into this

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Commonwealth, have precipitated a growing financial crisis.

(7) School districts are fixed cost-intensive operations

and seek stability in funding through property taxes, but the

predictability and certainty of school district property

taxes create contradictory impacts on property owners in

meeting their tax obligations.

(8) School district property tax reform must be

accomplished in an equitable manner in the form of the total

elimination of school district property taxes for residential

and commercial properties. Businesses in this Commonwealth

alone cannot and should not bear the financial burden caused

by the elimination of school district property taxes on

residential property only. (See 53 Pa.C.S. § 9011(a).)

(9) School district property tax reform must also

include rental properties, whereby each landlord must reduce

rental payments required of each residential or commercial

tenant in an amount equal to the reduction of taxes on real

property attributable to a tenant's unit. (See 53 Pa.C.S. §

9017.)

(10) This act provides for the elimination of school

district property taxes through the following:

(i) An increase in the sales, use and occupancy

taxes, whereby a new or additional 2% tax shall be

imposed on certain items and that money distributed to

each county of this Commonwealth, which shall disburse

money to school districts within the county from the

School District Property Tax Elimination Fund. (See 53

Pa.C.S. Ch. 90A Subchs. C and F.) For this purpose,

certain exclusions from taxation are eliminated,

including certain clothing, candy and gum. (See 53

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Pa.C.S. § 90A22(b.1).)

(ii) The imposition by each school district of a

local tax on the personal income of resident taxpayers of

the school district up to a maximum rate of 1.88%, the

revenue from which shall be collected by and be solely

for the use of school districts. (See 53 Pa.C.S. Ch. 90A

Subch. D.) For this purpose, compensation is expanded to

include taxation of old age or retirement benefits, with

the exception of Social Security benefits and other

similar types of benefits enumerated under the definition

of "compensation." (See the definition of "compensation"

in 72 Pa.C.S. § 2102, which effectuates these changes.)

(11) This act is not intended to reduce expenditures

made to school districts in this Commonwealth. The purpose of

this act is to shift a source of local school district

funding away from school district property taxes in a manner

that does not negatively impact school districts.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Title 53 of the Pennsylvania Consolidated

Statutes is amended by adding chapters to read:

CHAPTER 90

SCHOOL DISTRICT PROPERTY TAX ELIMINATION

Subchapter

A. Preliminary Provisions

B. Administration

SUBCHAPTER A

PRELIMINARY PROVISIONS

Sec.

9001. Scope of chapter.

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9002. Definitions.

§ 9001. Scope of chapter.

This chapter relates to school district property tax

elimination.

§ 9002. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Base year." The first fiscal year of a school district

beginning after June 30, 2027.

"Board." The School District Property Tax Elimination

Appeals Board.

"Department." The Department of Education of the

Commonwealth.

"Earned income tax." A tax on earned income and net profits

levied under:

(1) the act of June 27, 2006 (1st Sp.Sess., P.L.1873,

No.1), known as the Taxpayer Relief Act; or

(2) the act of October 15, 2008 (P.L.1615, No.130).

"Emergency fund." The School District Emergency Fund

established under section 9013 (relating to School District

Emergency Fund).

"Fund." The School District Property Tax Elimination Fund

established under section 90A51 (relating to School District

Property Tax Elimination Fund).

"Secretary." The Secretary of Education of the Commonwealth.

SUBCHAPTER B

ADMINISTRATION

Sec.

9011. Prohibition.

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9012. School District Property Tax Elimination Appeals Board.

9013. School District Emergency Fund.

9014. Supplemental funding.

9015. Excess money.

9016. Effect on basic education funding allocation.

9017. Rent reductions.

9018. Training.

§ 9011. Prohibition.

(a) General rule.--Except as provided in subsection (b), for

the first fiscal year of a school district beginning after

December 31, 2029, and each fiscal year of the school district

thereafter, the school district may not levy, assess or collect

real property taxes.

(b) Exception.--Subsection (a) shall not apply to the

collection of delinquent taxes.

subsection (a), by a school district to reinstate real property

taxes or levy against real property, the school district may

not:

(1) Receive any future disbursements through the fund.

(2) Impose a personal income tax under Subchapter D of

Chapter 90A (relating to personal income tax).

§ 9012. School District Property Tax Elimination Appeals Board.

(a) Establishment.--The School District Property Tax

Elimination Appeals Board is established.

(b) Composition.--The board shall consist of the following

members:

(1) Two representatives of the department, to be

appointed by the secretary.

(2) A representative of the Pennsylvania State Education

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Association, to be appointed by the secretary.

(3) A representative of the Pennsylvania Association of

School Business Officials, to be appointed by the secretary.

(4) A representative of the Pennsylvania School Boards

Association, to be appointed by the secretary.

(5) An individual appointed by the President pro tempore

of the Senate.

(6) An individual appointed by the Speaker of the House

of Representatives.

(7) An individual appointed by the Majority Leader of

the Senate.

(8) An individual appointed by the Majority Leader of

the House of Representatives.

(9) An individual appointed by the Minority Leader of

the Senate.

(10) An individual appointed by the Minority Leader of

the House of Representatives.

of the board, who shall be one of the representatives of the

department.

(d) Compensation.--Members of the board shall not be

entitled to compensation for their services as members but shall

be entitled to reimbursement for actual and necessary travel

expenses.

(e) Vacancies.--A vacancy on the board shall be filled in

the same manner as the original appointment.

(f) Quorum.--A majority of the appointed members of the

board shall constitute a quorum. Action may be taken by the

board at a meeting upon a vote of a quorum of its members

present in person or through electronic means.

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(g) Meetings.--

(1) The board shall hold the board's first meeting

within 30 days of the effective date of this section.

(2) The board shall meet at the call of the chairperson

or as otherwise provided by the board.

(3) Meetings of the board shall be subject to the

requirements of 65 Pa.C.S. Ch. 7 (relating to open meetings).

(h) Administrative support.--The department shall provide

administrative support, meeting space, data, research and any

other assistance or information required by the board to carry

out the board's duties.

(i) Duties.--The board shall:

(1) Provide information to counties and school districts

regarding the use of the fund and the requirements under this

chapter.

(2) During the base year and the first three fiscal

years immediately following the base year, periodically

evaluate the finances of each school district in this

Commonwealth to determine whether the school district is

negatively impacted as a result of the elimination of school

district property taxes and the replacement of that revenue

through disbursements from the fund.

(3) Make a determination as to a request for

supplemental funding under section 9014 (relating to

supplemental funding).

§ 9013. School District Emergency Fund.

(a) Establishment.--The School District Emergency Fund is

established as a separate fund in the State Treasury.

(b) Purpose.--The emergency fund shall be used to make

disbursements at a time and in a manner determined by the board

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in accordance with section 9014 (relating to supplemental

funding).

(1) The sum of $500,000,000 is appropriated from the

General Fund to the emergency fund for the fiscal years July

1, 2027, to June 30, 2029. The appropriation shall be a

continuing appropriation and shall not lapse. The

appropriation shall be allocated as follows:

(i) For fiscal year 2027-2028, $250,000,000.

(ii) For fiscal year 2028-2029, $250,000,000.

(2) For fiscal year 2029-2030, and each fiscal year

thereafter, the department shall transfer the amount remitted

under subsection (d) to the emergency fund. A school district

may not receive supplemental funding under section 9014 in an

amount in excess of the amount contained in the school

district's segregated account under subsection (d)(3) plus

any funds remaining from the appropriations under paragraph

(1).

(d) Remittance.--

(1) By August 1, 2029, and each August 1 thereafter,

each school district shall submit one quarter of 1% of the

school district's budget for that school year to the

department.

(2) By September 1, 2029, and each September 1

thereafter, the department shall transfer the amount remitted

under paragraph (1) to the emergency fund.

(3) The amount transferred under paragraph (2) shall be

segregated in the emergency fund by accounts for each

separate school district.

§ 9014. Supplemental funding.

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(a) Application.--

(1) A school district that is negatively impacted as a

result of the elimination of school district property taxes

and the replacement of that revenue through disbursements

from the fund may apply to the board for special

consideration of additional supplemental funding to the

school district because the school district faces unforeseen

or exigent financial circumstances.

(2) The request for supplemental funding shall specify

the reasons and amount of the request, along with any course

of action that may mitigate the request.

(b) Review and determination.--The board shall, in a timely

manner, review the application under subsection (a) and

determine the amount of supplemental funding to be received by

the school district from the emergency fund.

under subsection (a), money in the General Fund shall be paid to

the school district to offset a revenue loss to the school

district due to the absence of an income tax reciprocity

agreement between the Commonwealth and another state. The board

shall determine the amount of the payment based on the amount of

residential real property tax levied and assessed by the school

district in the base year.

(d) Notice.--The board shall notify the school district in

writing of its determination.

§ 9015. Excess money.

If, as a result of the disbursements made through the fund, a

school district receives more money during a fiscal year than

the amount under the school district budget approved by the

school district's board of school directors for that fiscal

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year, the school district shall reduce the earned income tax

imposed by the school district or reduce any indebtedness of the

school district by the difference between the amount of the fund

disbursements and the amount under the school district budget.

§ 9016. Effect on basic education funding allocation.

This chapter is not intended to alter the basic education

funding allocation.

§ 9017. Rent reductions.

(a) Amount of reduction.--Each landlord shall reduce rental

payments required of each residential or commercial tenant in an

amount equal to the reduction of taxes on real property

attributable to the tenant's unit unless the landlord can

confirm by a written disclosure that prior property tax

increases over the past five years were not passed to each

tenant. The amount of tax reduction attributable to each unit

shall be based upon allocated square footage occupied or other

reasonable criteria. The rental amount specified in a lease

shall reflect any reduction in real property taxes under this

chapter.

(b) Calculation.-- The rental reduction per rental payment

shall be calculated by dividing the total real property tax

reduction applicable to the real property leased by the tenant

by the number of payments required of the tenant during that tax

year. In cases where more than one rental unit is situated upon

a tract of real estate affected by the tax reduction, the

landlord shall reduce the rent of each tenant in a proportion

equal to the total amount of rent that the rental unit leased by

the tenant bears to the total amount of rent of all rental units

situated upon the tract of real estate.

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payments required of each tenant commencing with the first date

on which the tenant is required to pay rent subsequent to the

effective date of the elimination of the school real property

tax and ending on the last date the tenant is required to pay

rent under the lease. If a lease is on a month-to-month basis,

rental payments shall only be reduced for the first month during

which the tenant is required to pay rent subsequent to the

effective date of the elimination of the school real property

tax.

(d) Applicability.--This section shall apply to leases

entered into before, on or after the effective date of this

section.

(e) Taxability.--A reduction in rent provided under this

section shall not be taxable.

§ 9018. Training.

The following may provide training regarding budget and

financial management for school district officials as a result

of the implementation of the fund:

(1) The board.

(2) An institution of higher education, as defined in

section 118(c) of the act of March 10, 1949 (P.L.30, No.14),

known as the Public School Code of 1949, that has expertise

in financial management, budgeting, treasury operations and

forecasting.

CHAPTER 90A

COUNTY AND SCHOOL DISTRICT TAXES

Subchapter

A. Preliminary Provisions

B. Subjects of Taxation

C. Sales and Use Tax

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D. Personal Income Tax

E. Credits and Exemptions

F. Disbursement

SUBCHAPTER A

PRELIMINARY PROVISIONS

Sec.

90A01. Scope of chapter.

90A02. Definitions.

90A03. Scope and limitations.

§ 90A01. Scope of chapter.

This chapter relates to county tax imposition.

§ 90A02. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Base year." As defined in section 9002 (relating to

definitions).

"Board of county commissioners." Includes the successor in

function to the board of county commissioners in a county which

has adopted a home rule charter under the former act of April

13, 1972 (P.L.184, No.62), known as the Home Rule Charter and

Optional Plans Law, or under Subpart E of Part III (relating to

home rule and optional plan government).

"County." A county-level municipality within this

Commonwealth, regardless of classification. The term includes a

county which has adopted a home rule charter or optional plan of

government under the former Home Rule Charter and Optional Plans

Law or under Subpart E of Part III.

"County sales and use tax account." The separate account

established in the fund for each county under section 90A52(b)

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(relating to payments to counties).

"Current year." The calendar year or fiscal year for which

the tax is levied.

"Department." The Department of Revenue of the Commonwealth.

"Domicile." As defined in section 501 of the Local Tax

Enabling Act.

"Fund." The School District Property Tax Elimination Fund

established under section 90A51 (relating to School District

Property Tax Elimination Fund).

"Governing body." The board of county commissioners,

including the successor in function to the board of county

commissioners in a county which has adopted a home rule charter

under the former Home Rule Charter and Optional Plans Law or

under Subpart E of Part III.

"Individual." As defined in 72 Pa.C.S. § 2102 (relating to

definitions).

"Local Tax Enabling Act." The act of December 31, 1965

(P.L.1257, No.511), known as The Local Tax Enabling Act.

"Ordinance." Includes a resolution.

"Personal income." Income enumerated in 72 Pa.C.S. § 2203

(relating to classes of income) as returned to and ascertained

by the department, subject, however, to any correction thereof

for fraud, evasion or error as finally ascertained by the

Commonwealth.

"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971.

"Taxpayer." An individual required under this chapter to

file a tax return or to pay a tax.

§ 90A03. Scope and limitations.

It is the intent of this chapter to require each county and

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school district to levy, assess and collect taxes.

SUBCHAPTER B

SUBJECTS OF TAXATION

Sec.

90A11. General tax authorization.

90A12. Continuity of tax.

§ 90A11. General tax authorization.

(a) County.--Each county shall by ordinance levy, assess and

collect or provide for the levying, assessment and collection of

taxes on the subjects specified under this chapter within the

geographical limits of the county.

(b) School district.--Each school district shall by

resolution levy, assess and collect or provide for the levying,

assessment and collection of taxes on the subjects specified

under this chapter within the geographical limits of the school

district.

(1) Nothing under section 305 of the Local Tax Enabling

Act shall be construed to require the vacation of an

ordinance or resolution passed under the authority of Chapter

3 of the Local Tax Enabling Act as a result of the assessment

and collection of taxes on the subjects specified under this

chapter.

(2) The assessment and collection of taxes on the

subjects specified under this chapter shall not apply to the

provisions of section 311 of the Local Tax Enabling Act.

(3) The calculation of the aggregate amount of taxes

under section 320 of the Local Tax Enabling Act shall not

include any re venues derived from the assessment and

collection of taxes on the subjects specified under this

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chapter .

§ 90A12. Continuity of tax.

Each tax levied under this chapter shall continue in force on

a calendar or fiscal year basis, as the case may be, without

annual reenactment unless the rate of tax is increased or the

tax is subsequently repealed.

SUBCHAPTER C

SALES AND USE TAX

Sec.

90A21. Construction.

90A22. Imposition.

90A23. Situs.

90A24. Licenses.

90A25. Rules and regulations and collection costs.

90A26. Procedure and administration.

§ 90A21. Construction.

The tax imposed by the governing body under this subchapter

shall be in addition to any tax imposed by the Commonwealth

under 72 Pa.C.S. Pt. II Subpt. A (relating to sales and use

tax). Except for the differing situs provisions under section

90A23 (relating to situs), the provisions of 72 Pa.C.S. Pt. II

Subpt. A shall apply to the tax.

§ 90A22. Imposition.

(a) Sales.--Each governing body shall, beginning October 1,

2029, levy and assess on each separate sale at retail of

tangible personal property or services, as defined in 72 Pa.C.S.

§ 1102 (relating to definitions), within the boundaries of the

county, a tax on the purchase price. The tax shall be collected

by the vendor from the purchaser and shall be paid over to the

Commonwealth.

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(b) Use.--Each governing body shall, beginning October 1,

2029, levy and assess a tax on the use, within the county, of

tangible personal property purchased at retail and on services

purchased at retail, as defined in 72 Pa.C.S. § 1102, on the

purchase price. The tax shall be paid over to the Commonwealth

by the person who makes the use. The use tax imposed under this

subchapter shall not be paid over to the Commonwealth by any

person who has paid the tax imposed under:

(1) Subsection (a).

(2) This subsection to the vendor with respect to the

use.

(b.1) Subjects of taxation.--Notwithstanding any exclusion

from sales and use tax under 72 Pa.C.S. Pt. II Subpt. A

(relating to sales and use tax), the tax under subsections (a)

and (b) may be imposed on the following:

(1) T he sale at retail or use of clothing and other

related items, as specified in 72 Pa.C.S. § 1321(17)(ii)

(relating to exclusions), except t he sale at retail or use of

used clothing, if the clothing is sold by an institution or

organization that has received a determination of exception

from the Internal Revenue Service under section 501(c)(3) of

the Internal Revenue Code of 1986, as amended (26 U.S.C. §

501(c)(3)). The following apply:

(i) The exemption granted under this paragraph shall

be limited to institutions or organizations that are not

organized or operated for profit, and no part of the net

earnings of which inures to the benefit of any private

shareholder or individual.

(ii) No institution or organization shall be exempt

under this paragraph, unless the institution or

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organization shall have issued to it by the department an

exemption certificate declaring that the institution or

organization is entitled to the exemption provided for by

this paragraph.

(iii) All proceeds from sales exempted under this

paragraph must be for section 501(c)(3) purposes.

(2) The sale at retail or use of candy or gum, as

specified in 72 Pa.C.S. § 1321(40).

by subsection (a) is imposed, there shall be levied, assessed

and collected an excise tax on the rent on each occupancy of a

room in a hotel in the county. The tax shall be collected by the

operator or owner from the occupant and paid over to the

Commonwealth.

(d) Rate and uniformity.--

(1) The tax under subsections (a), (b) and (c) shall be

imposed at a rate of 2%.

(2) The tax imposed by subsections (a), (b) and (c)

shall be uniform.

(e) Computation.--The tax imposed under this section shall

be computed in the same manner under section 503(e)(2) of the

act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania

Intergovernmental Cooperation Authority Act for Cities of the

First Class.

(f) Deposit.--Taxes collected under this section shall be

deposited into the fund.

§ 90A23. Situs.

(a) General rule.--Except as provided under subsections (b)

and (c), the situs of sales at retail or uses, including leases,

of motor vehicles, aircraft, motorcraft and utility services

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shall be determined in the manner specified by section 504 of

the act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania

Intergovernmental Cooperation Authority Act for Cities of the

First Class, and 72 Pa.C.S. Pt. II Subpt. A (relating to sales

and use tax).

(b) Premium cable services.--The sale or use of premium

cable service shall be deemed to occur at the service address in

the county which is the address where the customer cable

connection is located. This subsection shall determine the situs

of premium cable service for the purpose of all local sales

taxes, including those imposed under Chapter 5 of the

Pennsylvania Intergovernmental Cooperation Authority Act for

Cities of the First Class and under Subdivision (e) of Article

XXXI-B of the act of July 28, 1953 (P.L.723, No.230), known as

the Second Class County Code.

telecommunications service under this chapter shall be

determined in accordance with regulations adopted by the

department, which shall be uniform among all counties, and shall

be consistent with regulations promulgated under Subdivision (e)

of Article XXXI-B of the Second Class County Code, 72 Pa.C.S.

Pt. II Subpt. A and Chapter 5 of the Pennsylvania

Intergovernmental Cooperation Authority Act for Cities of the

First Class.

§ 90A24. Licenses.

A license for the collection of the tax imposed by this

subchapter shall be issued in the same manner as is provided for

in section 505 of the act of June 5, 1991 (P.L.9, No.6), known

as the Pennsylvania Intergovernmental Cooperation Authority Act

for Cities of the First Class. Licensees shall be entitled to

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the same discount as provided in 72 Pa.C.S. § 1526 (relating to

discount).

§ 90A25. Rules and regulations and collection costs.

(a) Rules and regulations.--Rules and regulations shall be

applicable to the taxes imposed under section 90A23 (relating to

situs) in the same manner as is provided under section 506(1)

and (2) of the act of June 5, 1991 (P.L.9, No.6), known as the

Pennsylvania Intergovernmental Cooperation Authority Act for

Cities of the First Class.

(b) Administrative costs.--The department, to cover its

costs of administration under this subchapter, shall be entitled

to retain a sum equal to the costs of administration. When the

annual operating budget for the department is submitted to the

General Assembly, the department shall also submit to the

chairperson and minority chairperson of the Appropriations

Committee of the Senate and to the chairperson and minority

chairperson of the Appropriations Committee of the House of

Representatives a report of the actual sums retained for costs

of collection in the preceding fiscal year, together with all

supporting details.

§ 90A26. Procedure and administration.

Prior to adopting an ordinance imposing a tax under this

chapter, the governing body shall give public notice of its duty

to adopt the ordinance in the manner provided by section 306 of

the Local Tax Enabling Act.

SUBCHAPTER D

PERSONAL INCOME TAX

Sec.

90A31. Construction.

90A32. Local personal income tax.

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90A33. Collections.

90A34. Rules and regulations.

90A35. Procedure and administration.

§ 90A31. Construction.

The tax imposed by the school district under this subchapter

shall be in addition to any tax imposed by the Commonwealth

under 72 Pa.C.S. Pt. II Subpt. B (relating to personal income

tax). Except for the differing provisions under sections 90A41

(relating to credits), 90A42 (relating to low-income tax

provisions) and 90A43 (relating to regulations), the provisions

of 72 Pa.C.S. Pt. II Subpt. B shall apply to the tax.

§ 90A32. Local personal income tax.

Each school district shall adopt a resolution to, beginning

October 1, 2029, levy, assess and collect a local tax on the

personal income of resident taxpayers of the school district up

to a maximum rate of 1.88%.

§ 90A33. Collections.

Each school district imposing a tax under section 90A32

(relating to local personal income tax) shall designate the tax

officer who is appointed under section 507 of the Local Tax

Enabling Act, or otherwise by law, as the collector of the tax.

In the performance of the tax collection duties under this

subchapter, the designated tax officer shall have all the same

powers, rights, responsibilities and duties for the collection

of the taxes which may be imposed under the Local Tax Enabling

Act or as otherwise provided by law.

§ 90A34. Rules and regulations.

Taxes imposed under section 90A32 (relating to local personal

income tax) shall be subject to the rules and regulations

adopted by the department under Article III of the Tax Reform

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Code.

§ 90A35. Procedure and administration.

Prior to adopting the resolution imposing the tax under

section 90A32 (relating to local personal income tax), the

school district shall give public notice of its duty to adopt

the resolution in the manner provided by section 306 of the

Local Tax Enabling Act.

SUBCHAPTER E

CREDITS AND EXEMPTIONS

Sec.

90A41. Credits.

90A42. Low-income tax provisions.

90A43. Regulations.

§ 90A41. Credits.

The provisions of section 317 of the Local Tax Enabling Act

shall be used to determine any credits under the provisions of

this chapter for any taxes imposed under section 90A32 (relating

to local personal income tax) on the earned income portion of

the personal income tax.

§ 90A42. Low-income tax provisions.

The provisions of 72 Pa.C.S. § 2204 (relating to special tax

provisions for poverty) shall be applied by each school district

which levies a tax under section 90A32 (relating to local

personal income tax.

§ 90A43. Regulations.

Each school district may adopt regulations for the processing

of claims under this subchapter.

SUBCHAPTER F

DISBURSEMENT

Sec.

20250HB1649PN2003 - 22 -

90A51. School District Property Tax Elimination Fund.

90A52. Payments to counties.

90A53. Payments by counties.

§ 90A51. School District Property Tax Elimination Fund.

(a) Establishment.--The School District Property Tax

Elimination Fund is established as a separate fund in the State

Treasury.

(b) Purpose.--The fund shall be used to make disbursements

at a time and in a manner determined by the Department of

Education in consultation with the department and in accordance

with Chapter 90 (relating to school district property tax

elimination) for the purpose of eliminating school district

property taxes.

fund:

(1) Money deposited under section 90A22(f) (relating to

imposition).

(2) Money appropriated or transferred to the fund.

(3) Return on money in the fund.

(4) Grants, gifts, donations and other payments from a

person or governmental entity to the fund.

§ 90A52. Payments to counties.

(a) Initial amounts.--During the first three fiscal years

immediately following the base year, the State Treasurer shall

make distributions to each county, on behalf of school districts

within the county, from the fund in an amount equivalent to the

total real property tax revenues collected by the school

districts during the base year, without regard to the amount of

money contained in the fund at the time of the distributions.

The General Assembly shall appropriate as much money as

20250HB1649PN2003 - 23 -

necessary to allow the fund to remain solvent to make the

distributions.

(b) County accounts.--For each county the (proper name)

County Sales and Use Tax Account is established as a separate

account within the fund.

immediately following the base year, and each fiscal year

thereafter, the following apply:

(1) Taxes imposed under section 90A22 (relating to

imposition) shall be received by the department and paid to

the State Treasurer and, along with interest and penalties,

less any collection costs allowed under this chapter and any

refunds and credits paid, shall be credited, based on the

situs of the sales at retail or uses, to the respective

county sales and use tax accounts. Money shall be credited to

the county sales and use tax accounts not less frequently

than every two weeks.

(2) Money in the county sales and use tax accounts shall

not lapse or be transferred to any other fund, but shall

remain in the county sales and use tax accounts. Pending

their disbursement, money received on behalf of or deposited

into the county sales and use tax accounts shall be invested

or reinvested as is other money in the custody of the State

Treasurer in the manner provided by law. All earnings

received from the investment or reinvestment of the money

shall be credited to the respective county sales and use tax

accounts.

(3) The State Treasurer shall make periodic

disbursements to each county, on behalf of school districts

within the county, out of the money contained in the county's

20250HB1649PN2003 - 24 -

sales and use tax account.

§ 90A53. Payments by counties.

Each county shall distribute to each school district a

portion of the total disbursement to school districts which is

equal to the total disbursement to school districts multiplied

by the ratio of average daily membership of the school district

divided by the sum of the average daily membership of all school

districts in the county. For the purposes of this section, the

term "average daily membership" shall mean "average daily

membership" as defined by the act of March 10, 1949 (P.L.30,

No.14), known as the Public School Code of 1949. For school

districts located in more than one county, the average daily

membership shall be multiplied by a factor calculated by

dividing the square mileage of the school district located in

the county by the total square mileage of the school district.

Section 2. Title 72 is amended by adding parts to read:

PART I

PRELIMINARY PROVISIONS

Chapter

1. General Provisions

CHAPTER 1

GENERAL PROVISIONS

Sec.

101. Scope of title.

102. Definitions.

§ 101. Scope of title.

This title relates to taxation and fiscal affairs.

§ 102. Definitions.

Subject to additional definitions contained in subsequent

provisions of this title which are applicable to specific

20250HB1649PN2003 - 25 -

provisions under this title, the following words and phrases

when used in this title shall have the meanings given to them in

this section unless the context clearly indicates otherwise:

"Department." The Department of Revenue of the Commonwealth.

"Fiscal Code." The act of April 9, 1929 (P.L.343, No.176),

known as The Fiscal Code.

"Internal Revenue Code of 1954." The Internal Revenue Code

of 1954 (68A Stat. 3).

"Internal Revenue Code of 1986." The Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

"Liquor Code." The act of April 12, 1951 (P.L.90, No.21),

known as the Liquor Code.

"Mobile Telecommunications Sourcing Act." The Mobile

Telecommunications Sourcing Act (Public Law 106-252, 114 Stat.

626).

"Secretary." The Secretary of Revenue of the Commonwealth.

"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971.

PART II

STATE TAX PROVISIONS

Subpart

A. Sales and Use Tax

B. Personal Income Tax

SUBPART A

SALES AND USE TAX

Chapter

11. Preliminary Provisions

13. Taxation Generally

15. Procedure and Administration

CHAPTER 11

20250HB1649PN2003 - 26 -

PRELIMINARY PROVISIONS

Sec.

1101. Scope of subpart.

1102. Definitions.

§ 1101. Scope of subpart.

This subpart relates to sales and use tax.

§ 1102. Definitions.

The following words and phrases when used in this subpart

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Adjustment services, collection services or credit reporting

services." As follows:

(1) A service providing collection or adjustments of

accounts receivable or mercantile or consumer credit

reporting, including, but not limited to, services provided

by an adjustment bureau or collection agency, a consumer or

mercantile credit reporting bureau, a credit bureau or

agency, a credit clearinghouse or a credit investigation

service.

(2) The term shall not include any of the following:

(i) Providing credit card service with collection by

a central agency.

(ii) Providing debt counseling or adjustment

services to individuals.

(iii) Billing or collection services provided by a

local exchange telephone company.

"Affiliated person." A person that, with respect to another

person:

(1) has a direct or indirect ownership interest of more

than 5% in the other person; or

20250HB1649PN2003 - 27 -

(2) is related to the other person because a third

person, or group of third persons who are affiliated with

each other as defined in this definition, holds a direct or

indirect ownership interest of more than 5% in the related

person.

"Animal housing facility." A roofed structure or facility,

or a portion of the facility, used for occupation by livestock

or poultry.

"Blasting." The use of a combustible or explosive

composition in the removal of material resources, minerals and

mineral aggregates from the earth, including the separation of

the dirt, waste and refuse in which they are found.

"Building machinery and equipment." As follows:

(1) Generation equipment, storage equipment,

conditioning equipment, distribution equipment and

termination equipment, limited to the following:

(i) Air conditioning, limited to heating, cooling,

purification, humidification, dehumidification and

ventilation.

(ii) Electrical.

(iii) Plumbing.

(iv) Communications limited to voice, video, data,

sound, master clock and noise abatement.

(v) Alarms, limited to fire, security and detection.

(vi) A control system, limited to energy management,

traffic and parking lot and building access.

(vii) A medical system, limited to diagnosis and

treatment equipment, medical gas, nurse call and doctor

paging.

(viii) A laboratory system.

20250HB1649PN2003 - 28 -

(ix) A cathodic protection system.

(x) Furniture, cabinetry and kitchen equipment.

(2) The term shall include any of the following,

together with integral coverings and enclosures, whether the

item constitutes a fixture or is otherwise affixed to the

real estate, whether damage would be done to the item or its

surroundings upon removal or whether the item is physically

located within a real estate structure:

(i) Boilers.

(ii) Chillers.

(iii) Air cleaners.

(iv) Humidifiers.

(v) Fans.

(vi) Switchgear.

(vii) Pumps.

(viii) Telephones.

(ix) Speakers.

(x) Horns.

(xi) Motion detectors.

(xii) Dampers.

(xiii) Actuators.

(xiv) Grills.

(xv) Registers.

(xvi) Traffic signals.

(xvii) Sensors.

(xviii) Card access devices.

(xix) Guardrails.

(xx) Medial devices.

(xxi) Floor troughs.

(xxii) Grates.

20250HB1649PN2003 - 29 -

(xxiii) Laundry equipment.

(3) The term shall not include any of the following:

(i) Guardrail posts.

(ii) Pipes.

(iii) Fittings.

(iv) Pipe supports and hangers.

(v) Valves.

(vi) Underground tanks.

(vii) Wire.

(viii) Conduit.

(ix) Receptacle and junction boxes.

(x) Insulation.

(xi) Ductwork.

(xii) Coverings.

"Building maintenance or cleaning services." As follows:

(1) Providing services, including any of the following:

(i) Janitorial, maid or housekeeping service.

(ii) Office or interior building cleaning or

maintenance.

(iii) Window cleaning.

(iv) Floor waxing.

(v) Lighting maintenance such as bulb replacement.

(vi) Cleaning.

(vii) Chimney cleaning.

(viii) Acoustical tile cleaning.

(ix) Venetian blind cleaning.

(x) Cleaning and maintenance of telephone booths.

(xi) Cleaning and degreasing of service stations.

(2) The term shall not include any of the following:

(i) Repairs on buildings and other structures.

20250HB1649PN2003 - 30 -

(ii) Maintenance or repair of boilers, furnaces and

residential air conditioning equipment or parts of

boilers, furnaces and residential air conditioning

equipment.

(iii) Painting, wallpapering or applying other

coverings to interior walls, ceilings or floors.

(iv) Exterior painting of buildings.

"Car-sharing program agreement." The terms and conditions

that govern the use of a shared vehicle through a peer-to-peer

car-sharing program.

"Commercial aircraft operator." A person, excluding a

scheduled airline, engaging in any or all of the following:

(1) Aircraft charters.

(2) Aircraft leasing.

(3) Aircraft sales.

(4) Aircraft rental.

(5) Flight instruction.

(6) Air freight.

(7) Other flight activities for compensation.

"Commercial racing activities." Any of the following:

(1) Thoroughbred and harness racing at which pari-mutuel

wagering is conducted under 3 Pa.C.S. Ch. 93 (relating to

race horse industry reform).

(2) Fair racing sanctioned by the State Harness Racing

Commission.

"Construction contract." As follows:

(1) A written or oral contract or agreement for the

construction, reconstruction, remodeling, renovation or

repair of real estate or a real estate structure.

(2) The term shall not apply to services which are

20250HB1649PN2003 - 31 -

taxable under any of the following:

(i) Paragraph (1)(ix) or (xi) of the definition of

"sale at retail."

(ii) Paragraph (1)(vi) or (viii) of the definition

of "use."

"Construction contractor." A person who performs an activity

under a construction contract, including a subcontractor.

"Disinfecting or pest control services." As follows:

(1) A service providing disinfecting, termite control,

insect control, rodent control or other pest control

services, including deodorant servicing of restrooms,

washroom sanitation service, restroom cleaning service,

extermination service or fumigating service.

(2) As used in this definition:

(i) The term "fumigating service" shall not include

the fumigation of agricultural commodities or containers

used for agricultural commodities.

(ii) The term "insect control" shall not include the

spraying of trees which are harvested for commercial

purposes for gypsy moth control.

"Employment agency services." As follows:

(1) Providing employment services to a prospective

employer or employee other than employment services provided

by theatrical employment agencies and motion picture casting

bureaus.

(2) The term shall include services provided by

employment agencies, executive placement services and labor

contractor employment agencies other than farm labor.

"Flight simulator." A device used for the training or

instruction of an individual on a helicopter and similar

20250HB1649PN2003 - 32 -

rotorcraft.

"Forum." As follows:

(1) A place where sales at retail occur, whether

physical or electronic.

(2) The term shall include a store, booth, Internet

website, catalog or similar place.

"Gratuity." An amount paid or remitted for services

performed in conjunction with a sale of food or beverages or

hotel or motel accommodations when the amount is in excess of

the charges and the tax for the food, beverages or

accommodations, regardless of the method of billing or payment.

"Help supply services." As follows:

(1) Providing temporary or continuing help where the

help supplied is on the payroll of the supplying person or

entity, but is under the supervision of the individual or

business to which help is furnished.

(2) The term shall include service provided by any of

the following:

(i) Labor and manpower pools.

(ii) Employee leasing services.

(iii) Office help supply services.

(iv) Temporary help services.

(v) Usher services.

(vi) Modeling services.

(vii) Fashion show model supply services.

(3) The term shall not include services providing farm

labor or human health-related services, including nursing,

home health care and personal care. As used in this

paragraph, the term "personal care" shall include providing

at least one of the following types of assistance to persons

20250HB1649PN2003 - 33 -

with limited ability for self-care:

(i) Dressing, bathing or feeding.

(ii) Supervising self-administered medication.

(iii) Transferring a person to or from a bed or

wheelchair.

(iv) Routine housekeeping chores when provided in

conjunction with and supplied by the same provider of the

assistance listed in subparagraph (i), (ii) or (iii).

"Internet." The international nonproprietary computer

network of both Federal and non-Federal interoperable packet

switched data networks.

"Lawn care service." Providing services for lawn upkeep,

including fertilizing, lawn mowing, shrubbery trimming and other

lawn treatment services.

"Liquor." As defined in section 102 of the Liquor Code.

"Lobbying services." Providing the services of a lobbyist,

as that term is defined in 65 Pa.C.S. § 13A03 (relating to

definitions).

"Maintaining a place of business in this Commonwealth." As

follows:

(1) Any of the following:

(i) Having, maintaining or using within this

Commonwealth, either directly or through a subsidiary,

representative or agent, an office, distribution house,

sales house, warehouse, service enterprise or other place

of business. This subparagraph shall include an agent of

general or restricted authority or other representative,

regardless of whether the place of business,

representative or agent is located in this Commonwealth

permanently or temporarily or whether the person or

20250HB1649PN2003 - 34 -

subsidiary maintaining the place of business,

representative or agent is authorized to do business in

this Commonwealth.

(ii) Engaging in an activity as a business in this

Commonwealth by a person, either directly or through a

subsidiary, representative or an agent, in connection

with the lease, sale or delivery of tangible personal

property or the performance of services for use, storage

or consumption or in connection with the sale or delivery

for use of the services described under paragraph (1)

(vi), (vii), (viii), (ix), (x), (xi) or (xii) of the

definition of "sale at retail," including having,

maintaining or using an office, distribution house, sales

house, warehouse or other place of business, a stock of

goods or a solicitor, canvasser, salesman, representative

or agent under its authority, at its direction or with

its permission, regardless of whether the person or

subsidiary is authorized to do business in this

Commonwealth.

(iii) Regularly or substantially soliciting orders

within this Commonwealth in connection with the lease,

sale or delivery of tangible personal property or the

performance of services or in connection with the sale or

delivery of the services described under paragraph (1)

(vi), (vii), (viii), (ix), (x), (xi) or (xii) of the

definition of "sale at retail" for residents of this

Commonwealth by means of catalogs or other advertising,

whether the orders are accepted within or without this

Commonwealth.

(iv) Entering this Commonwealth to provide assembly,

20250HB1649PN2003 - 35 -

service or repair of tangible personal property, either

directly or through a subsidiary, representative or

agent.

(v) Delivering tangible personal property to

locations within this Commonwealth if the delivery shall

include the unpacking, positioning, placing or assembling

of the tangible personal property.

(vi) Having contact within this Commonwealth which

would allow the Commonwealth to require a person to

collect and remit tax under the Constitution of the

United States.

(vii) Providing a customer's mobile

telecommunications service deemed to be provided by the

customer's home service provider under the Mobile

Telecommunications Sourcing Act. For purposes of this

subparagraph, words and phrases used in this subparagraph

shall have the meanings given to them in the Mobile

Telecommunications Sourcing Act.

(viii) As follows:

(A) Engaging in an activity as a business by a

person, either directly or through a subsidiary,

representative or agent, in connection with the

lease, sale or delivery of tangible personal property

into this Commonwealth or the performance of services

for use, storage or consumption or in connection with

the sale or delivery for use in this Commonwealth of

at least $100,000 during the preceding 12-month

calendar period.

(B) For a marketplace facilitator, this activity

includes all sales, leases and deliveries of tangible

20250HB1649PN2003 - 36 -

personal property and all sales of services by the

marketplace seller whose sales are facilitated

through the marketplace facilitator's forum.

marketplace facilitator, this activity includes all

sales, leases and deliveries of tangible personal

property and all sales of services by the marketplace

seller whose sales are facilitated through the peer-

to-peer car-sharing program.

(2) The term shall not include any of the following:

(i) Owning or leasing of tangible or intangible

property by a person who has contracted with an

unaffiliated commercial printer for printing if the

property is for use by the commercial printer and located

at the Pennsylvania premises of the commercial printer.

(ii) Visits by a person's employees or agents to the

premises in this Commonwealth of an unaffiliated

commercial printer with whom the person has contracted

for printing in connection with the contract.

"Malt or brewed beverages." As defined in section 102 of the

Liquor Code.

"Manufacture." As follows:

(1) The performance of manufacturing, fabricating,

compounding, processing or other operations engaged in as a

business, which place tangible personal property in a form,

composition or character different from that in which it is

acquired, whether for sale or use by the manufacturer.

(2) The term shall include any of the following:

(i) Every operation commencing with the first

production stage and ending with the completion of

20250HB1649PN2003 - 37 -

tangible personal property having the physical qualities,

including packaging which passes to the ultimate

consumer, the tangible personal property has when

transferred by the manufacturer to another. The following

apply:

(A) For purposes of this subparagraph, the term

"operation" shall include clean rooms and their

component systems, including any of the following:

(I) Environmental control systems.

(II) Antistatic vertical walls and

manufacturing platforms and floors, which are

independent of the real estate.

(III) Process piping systems.

(IV) Specialized lighting systems.

(V) Deionized water systems.

(VI) Process vacuum and compressed air

systems.

(VII) Process and specialty gases.

(VIII) Alarm or warning devices specifically

designed to warn of threats to the integrity of

the product or people.

(B) For purposes of clause (A), the term "clean

room" is a location with a self-contained, sealed

environment with a controlled, closed air system

independent from the facility's general environmental

control system.

(ii) The publishing and printing of books,

newspapers, magazines and other periodicals.

(iii) Refining, blasting, exploring, mining and

quarrying for, or otherwise extracting from the earth,

20250HB1649PN2003 - 38 -

from waste or stock piles, from pits or from banks,

natural resources, minerals and mineral aggregates,

including blast furnace slag.

(iv) Building, rebuilding, repairing and making

additions to or replacements in or upon vessels designed

for commercial use of registered tonnage of 50 tons or

more when produced upon special order of the purchaser,

or when rebuilt, repaired or enlarged, or when

replacements are made upon order of or for the account of

the owner.

(v) Research for the production of a new or improved

product or utility service or method of producing a

product or utility service, but not including market

research or research for the improvement of

administrative efficiency.

(vi) Remanufacture for wholesale distribution by a

remanufacturer of motor vehicle parts from used parts

acquired in bulk by the remanufacturer using an assembly

line process which involves the complete disassembly of

the parts and integration of the components of the parts

with other used or new components of parts, including the

salvaging, recycling or reclaiming of used parts by the

remanufacturer.

(vii) Remanufacture or retrofit by a manufacturer or

remanufacturer of aircraft, armored vehicles or other

defense-related vehicles having a finished value of at

least $50,000. Remanufacture or retrofit involves the

disassembly of the aircraft, vehicles, parts or

components, including electric or electronic components,

the integration of the parts and components with other

20250HB1649PN2003 - 39 -

used or new parts or components, including the salvaging,

recycling or reclaiming of the used parts or components

and the assembly of the new or used aircraft, vehicles,

parts or components. For purposes of this subparagraph,

the following words or phrases have the following

meanings:

(A) "Aircraft." A fixed-wing aircraft,

helicopter, powered aircraft, tilt-rotor or tilt-wing

aircraft, unmanned aircraft or glider.

(B) "Armored vehicles." A tank, armed personnel

carrier or other armed track or semitrack vehicle.

truck-tractor, trailer, jeep or other utility

vehicles, including an unmanned vehicle.

(viii) Remanufacture by a remanufacturer of

locomotive parts from used parts acquired in bulk by the

remanufacturer using an assembly line process which

involves the complete disassembly of the parts and

integration of the components of the parts with other

used or new components of parts, including the salvaging,

recycling or reclaiming of used parts by the

remanufacturer.

(3) The term shall not include any of the following:

(i) Constructing, altering, servicing, repairing or

improving real estate.

(ii) Repairing, servicing or installing tangible

personal property.

(iii) The producing of a commercial motion picture.

(iv) The cooking, freezing or baking of fruits,

vegetables, mushrooms, fish, seafood, meats, poultry or

20250HB1649PN2003 - 40 -

bakery products.

"Manufacturer of malt or brewed beverages." As defined in

section 102 of the Liquor Code.

"Marketplace facilitator." As follows:

(1) A person that facilitates the sale at retail of

tangible personal property.

(2) For purposes of this subpart, a person facilitates a

sale at retail if the person or an affiliated person:

(i) lists or advertises tangible personal property

for sale at retail in any forum; and

(ii) either directly or indirectly through

agreements or arrangements with third parties, collects

the payment from the purchaser and transmits the payment

to the person selling the property.

(3) The term includes a person that may also be a

vendor.

"Marketplace seller." A person that has an agreement with a

marketplace facilitator to facilitate sales for the person.

"Mobile telecommunications service." As defined in the

Mobile Telecommunications Sourcing Act.

"Peer-to-peer car sharing." The authorized use of a shared

vehicle by an individual, other than the owner of the vehicle,

through a peer-to-peer car-sharing program.

" Peer-to-peer car-sharing payment." Full consideration paid

or delivered, or promised to be paid or delivered, to the peer-

to-peer car-sharing marketplace facilitator under a car-sharing

program agreement, excluding charges for local sales or use tax,

State sales or use tax or public transportation assistance fund

fees.

"Peer-to-peer car-sharing program." A business platform

20250HB1649PN2003 - 41 -

that, through a peer-to-peer car-sharing marketplace, connects

shared vehicle owners with drivers to enable the sharing of

vehicles for financial consideration.

"Peer-to-peer car-sharing program marketplace." A forum on

which a shared vehicle is listed or advertised for peer-to-peer

car sharing.

"Peer-to-peer car-sharing program marketplace facilitator."

A person that facilitates peer-to-peer car sharing through a

peer -to-peer car-sharing marketplace and either directly or

indirectly, through agreements or arrangements with third

parties, collects the peer-to-peer car-sharing payment from the

purchaser and transmits the payment to the shared vehicle owner.

"Person." A natural person, association, fiduciary,

partnership, corporation or other entity, including the

Commonwealth of Pennsylvania, its political subdivisions and

instrumentalities and public authorities. When used in

prescribing and imposing a penalty, fine or imprisonment, or

both, the term, as applied to an association, shall include the

members of the association and, as applied to a corporation, the

officers of the corporation.

"Prebuilt housing." Either of the following:

(1) Manufactured housing, including a mobile home, which

bears a label as required by and referred to in the act of

November 17, 1982 (P.L.676, No.192), known as the

Manufactured Housing Construction and Safety Standards

Authorization Act.

(2) Industrialized housing as defined in the act of May

11, 1972 (P.L.286, No.70), known as the Industrialized

Housing Act.

"Prebuilt housing builder." A person who makes a prebuilt

20250HB1649PN2003 - 42 -

housing sale to a prebuilt housing purchaser.

"Prebuilt housing purchaser." A person who purchases

prebuilt housing in a transaction and who intends to occupy the

unit for residential purposes in this Commonwealth.

"Prebuilt housing sale." A sale of prebuilt housing to a

prebuilt housing purchaser, including a sale to a landlord,

without regard to whether the person making the sale is

responsible for installing the prebuilt housing or whether the

prebuilt housing becomes a real estate structure upon

installation. Temporary installation by a prebuilt housing

builder for display purposes of a unit held for resale shall not

be considered occupancy for residential purposes.

"Premium cable or premium video programming service." As

follows:

(1) Includes the portion of cable television services,

video programming services, community antenna television

services or other distribution of television, video, audio or

radio services which meets all of the following criteria:

(i) Is transmitted with or without the use of wires

to purchasers.

(ii) Consists substantially of programming

uninterrupted by paid commercial advertising which shall

include programming primarily composed of uninterrupted

full-length motion pictures or sporting events, pay-per-

view, paid programming or audio or radio broadcasting.

(iii) Does not constitute a component of a basic

service tier provided by a cable television system or a

cable programming service tier provided by a cable

television system. The following apply:

(A) A basic service tier shall include any of

20250HB1649PN2003 - 43 -

the following:

(I) All signals of domestic television

broadcast stations, any public, educational,

governmental or religious programming and

additional video programming signals or service

added to the basic service tier by the cable

operator.

(II) A single additional lower-priced

package of broadcast channels and access

information channels which is a subset of the

basic service tier under subclause (I).

(B) A cable programming service tier shall

include video programming other than any of the

following:

(I) The basic service tier.

(II) Video programming offered on a pay-per-

channel or pay-per-view basis.

(III) A combination of multiple channels of

pay-per-channel or pay-per-view programming

offered as a package.

(2) If a purchaser receives or agrees to receive premium

cable or premium video programming service, then the

following charges are included in the purchase price:

(i) Charges for installation or repair of any

premium cable or premium video programming service.

(ii) Upgrade to include additional premium cable or

premium video programming service.

(iii) Downgrade to exclude all or some premium cable

or premium video programming service.

(iv) Additional premium cable outlets in excess of

20250HB1649PN2003 - 44 -

10.

(v) Other charges or fees related to premium cable

or premium video programming services.

(3) The term shall not apply to the following:

(i) Transmissions by public television, public radio

services or official Federal, State or local government

cable services.

(ii) Local origination programming which provides a

variety of public service programs unique to the

community, programming which provides coverage of public

affairs issues which are presented without commentary or

analysis, including United States Congressional

proceedings, or programming which is substantially

related to religious subjects.

(iii) Subscriber charges for access to a video dial

tone system or charges by a common carrier to a video

programmer for the transport of video programming.

"Prepaid mobile telecommunications service." As follows:

(1) Mobile telecommunications service which is paid for

in advance and which enables the origination of calls using

an access number, authorization code or both, whether

manually or electronically dialed, if the remaining amount of

units of the prepaid mobile telecommunications service is

known by the service provider of the prepaid mobile

telecommunications service on a continuous basis.

(2) The term shall not include the advance purchase of

mobile telecommunications service if the purchase is pursuant

to a service contract between the service provider and

customer and if the service contract requires the customer to

make periodic payments to maintain the mobile

20250HB1649PN2003 - 45 -

telecommunications service.

"Prepaid telecommunications." A tangible item containing a

prepaid authorization number that can be used solely to obtain

telecommunications service, including a renewal or increase in

the prepaid amount.

"Processing." The performance of the following activities

when engaged in as a business enterprise:

(1) The filtering or heating of honey or the cooking,

baking or freezing of fruits, vegetables, mushrooms, fish,

seafood, meats, poultry or bakery products, when the person

engaged in the business packages the property in sealed

containers for wholesale distribution.

(2) The processing of fruits or vegetables by cleaning,

cutting, coring, peeling or chopping and treating to

preserve, sterilize or purify and substantially extend the

useful shelf life of the fruits or vegetables, when the

person engaged in the activity packages the property in

sealed containers for wholesale distribution.

(3) The scouring, carbonizing, cording, combing,

throwing, twisting or winding of natural or synthetic fibers,

or the spinning, bleaching, dyeing, printing or finishing of

yarns or fabrics, when the activities are performed prior to

sale to the ultimate consumer.

(4) The electroplating, galvanizing, enameling,

anodizing, coloring, finishing, impregnating or heat treating

of metals or plastics for sale or in the process of

manufacturing.

(5) The blanking, shearing, leveling, slitting or

burning of metals for sale to or use by a manufacturer or

processor.

20250HB1649PN2003 - 46 -

(6) The rolling, drawing or extruding of ferrous and

nonferrous metals.

(7) The fabrication for sale of ornamental or structural

metal or of metal stairs, staircases, gratings, fire escapes

or railings, not including fabrication work done at the

construction site.

(8) The preparation of animal feed or poultry feed for

sale.

(9) The production, processing and bottling of

nonalcoholic beverages for wholesale distribution.

(10) The operation of a saw mill or planing mill for the

production of lumber or lumber products for sale. The

operation of a saw mill or planing mill begins with the

unloading by the operator of the saw mill or planing mill of

logs, timber, pulpwood or other forms of wood material to be

used in the saw mill or planing mill.

(11) The milling for sale of flour or meal from grains.

(12) The aging, stripping, conditioning, crushing and

blending of tobacco leaves for use as cigar filler or as

components of smokeless tobacco products for sale to

manufacturers of tobacco products.

(13) The slaughtering and dressing of animals for meat

to be sold or to be used in preparing meat products for sale,

and the preparation of meat products, including lard, tallow,

grease, cooking and inedible oils for wholesale distribution.

(14) The processing of used lubricating oils.

(15) The broadcasting of radio and television programs

of licensed commercial or educational stations.

(16) The cooking or baking of bread, pastries, cakes,

cookies, muffins and donuts when the person engaged in the

20250HB1649PN2003 - 47 -

activity sells the items at retail at locations that do not

constitute an establishment from which ready-to-eat food and

beverages are sold. For purposes of this paragraph, a bakery,

pastry shop and donut shop are not to be considered an

establishment from which ready-to-eat food and beverages are

sold.

(17) The cleaning and roasting and the blending,

grinding or packaging for sale of coffee from green coffee

beans or the production of coffee extract.

(18) The preparation of dry or liquid fertilizer for

sale.

(19) The production, processing and packaging of ice for

wholesale distribution.

(20) The producing of mobile telecommunications

services.

(21) The collection, washing, sorting, inspecting and

packaging of eggs.

"Promoter." A person who directly or indirectly rents,

leases or otherwise operates or grants permission to a person to

use space at a show for the display for sale or for the sale of

tangible personal property or services subject to tax under

Subchapter A of Chapter 13 (relating to imposition of tax).

"Purchase at retail." As follows:

(1) Any of the following:

(i) The acquisition for a consideration of the

ownership, custody or possession of tangible personal

property other than for resale by the person acquiring

the property when the acquisition is made for the purpose

of consumption or use, whether the acquisition is

absolute or conditional, and by whatever means in which

20250HB1649PN2003 - 48 -

the acquisition is made.

(ii) The acquisition of a license to use or consume

and the rental or lease of tangible personal property,

other than for resale, regardless of the period of time

the lessee has possession or custody of the property.

(iii) The obtaining for a consideration of those

services described under paragraph (1)(ii), (iii) or (iv)

of the definition of "sale at retail" other than for

resale.

(iv) A retention after March 7, 1956, of possession,

custody or a license to use or consume under a rental

contract or other lease arrangement, other than as

security, other than for resale.

(v) The obtaining for a consideration of those

services described under paragraph (1)(vi), (vii),

(viii), (ix), (x), (xi) or (xii) of the definition of

"sale at retail."

(2) The term shall include the purchase of liquor from a

Pennsylvania liquor store by a person for any purpose, and

the purchase of malt or brewed beverages from a manufacturer

of malt or brewed beverages, distributor or importing

distributor by a person for any purpose, except purchases

from a manufacturer of malt or brewed beverages by a

distributor or importing distributor or purchases from an

importing distributor by a distributor within the meaning of

the Liquor Code.

(3) The term shall not include a purchase of malt or

brewed beverages from a retail dispenser or a purchase of

liquor or malt or brewed beverages from a person holding a

retail liquor license under the Liquor Code, but shall

20250HB1649PN2003 - 49 -

include purchase or acquisition of liquor or malt or brewed

beverages other than under the Liquor Code.

"Purchase price." As follows:

(1) The total value of anything paid or delivered, or

promised to be paid or delivered, whether it be money or

otherwise, in complete performance of a sale at retail or

purchase at retail without any deduction on account of the

cost or value of the property sold, cost or value of

transportation, cost or value of labor or service, interest

or discount paid or allowed after the sale is consummated,

other taxes imposed by the Commonwealth or other expense,

except that a gratuity and a separately stated deposit charge

for returnable containers shall be excluded.

(2) There shall be deducted from the purchase price the

value of any tangible personal property actually taken in

trade or exchange in lieu of the whole or any part of the

purchase price. For the purpose of this paragraph, the amount

allowed by reason of tangible personal property actually

taken in trade or exchange shall be considered the value of

the property.

(3) In determining the purchase price on the sale or use

of taxable tangible personal property or a service where,

because of affiliation of interests between the vendor and

purchaser or irrespective of the affiliation, if for any

other reason the purchase price declared by the vendor or

taxpayer on the taxable sale or use of the tangible personal

property or service is determined by the department not to be

indicative of the true value of the article or service or the

fair price of the article or service, the department shall,

under uniform and equitable rules, determine the amount of

20250HB1649PN2003 - 50 -

constructive purchase price upon the basis of which the tax

shall be computed and levied. The rules shall provide for a

constructive amount of purchase price for each sale or use

which would naturally and fairly be charged in an arm's-

length transaction in which the element of common interest

between the vendor or purchaser is absent or if no common

interest exists, any other element causing a distortion of

the price or value is likewise absent. For the purpose of

this paragraph where a taxable sale or purchase at retail

transaction occurs between a parent and a subsidiary,

affiliate or controlled corporation of the parent

corporation, there shall be a rebuttable presumption that

because of the common interest, the transaction was not at

arm's length.

(4) Where there is a transfer or retention of possession

or custody, whether it be termed a rental, lease, service or

otherwise, of tangible personal property including linens,

aprons, motor vehicles, trailers, tires, industrial office

and construction equipment and business machines, the full

consideration paid or delivered to the vendor or lessor shall

be considered the purchase price, even though the

consideration is separately stated and designated as payment

for processing, laundering, service, maintenance, insurance,

repairs, depreciation or otherwise. If the vendor or lessor

supplies or provides an employee to operate the tangible

personal property, the value of the labor supplied may be

excluded and may not be considered as part of the purchase

price if separately stated. There shall also be included as

part of the purchase price the value of anything paid or

delivered, or promised to be paid or delivered, by a lessee,

20250HB1649PN2003 - 51 -

whether money or otherwise, to a person other than the vendor

or lessor by reason of the maintenance, insurance or repair

of the tangible personal property which a lessee has the

possession or custody of under a rental contract or lease

arrangement.

(5) With respect to the tax imposed by Subchapter A of

Chapter 13 upon tangible personal property originally

purchased by the user of the property six months or longer

prior to the first taxable use of the property within this

Commonwealth, the user may elect to pay tax on a substituted

base determined by considering the purchase price of the

property for tax purposes to be equal to the prevailing

market price of similar tangible personal property at the

time and place of the first use within this Commonwealth. The

election must be made at the time of filing a tax return with

the department and reporting the tax liability and paying the

proper tax due plus all accrued penalties and interest, if

any, within six months of the due date of the report and

payment, as provided under section 1513(a) and (c) (relating

to time for filing returns).

(6) The purchase price of employment agency services and

help supply services shall be the service fee paid by the

purchaser to the vendor or supplying entity. As used in this

paragraph, the term "service fee" is the total charge or fee

of the vendor or supplying entity minus the costs of the

supplied employee, including wages, salaries, bonuses,

commissions, employment benefits, expense reimbursements and

payroll and withholding taxes, to the extent that these costs

are specifically itemized or that these costs in aggregate

are stated in billings from the vendor or supplying entity.

20250HB1649PN2003 - 52 -

To the extent that these costs are not itemized or stated on

the billings, then the service fee shall be the total charge

or fee of the vendor or supplying entity.

(7) Unless the vendor separately states that portion of

the billing which applies to premium cable service, the total

bill for the provision of all cable services shall be the

purchase price.

(8) The purchase price of prebuilt housing shall be 60%

of the manufacturer's selling price, but a manufacturer of

prebuilt housing who precollects tax from a prebuilt housing

builder at the time of the sale to the prebuilt housing

builder shall have the option to collect tax on 60% of the

selling price or on 100% of the actual cost of the supplies

and materials used in the manufacture of the prebuilt

housing.

(9) The purchase price of malt or brewed beverages sold

by a manufacturer of malt or brewed beverages directly to the

ultimate consumer for consumption on or off premises shall be

25% of the retail sales price of the malt or brewed beverages

sold for consumption on or off premises.

"Purchaser." As follows:

(1) A person who acquires, for a consideration, the

ownership, custody or possession by sale, lease or otherwise,

of tangible personal property or who obtains services in

exchange for a purchase price.

(2) The term shall not include an employer who obtains

services from the employer's employees in exchange for wages

or salaries when the services are rendered in the ordinary

scope of employment.

"Real estate structure." As follows:

20250HB1649PN2003 - 53 -

(1) A structure or item purchased by a construction

contractor under a construction contract with any of the

following:

(i) A charitable organization, volunteer

firefighters' organization, nonprofit educational

institution or religious organization for religious

purposes and which qualifies as an institution of purely

public charity under the act of November 26, 1997

(P.L.508, No.55), known as the Institutions of Purely

Public Charity Act.

(ii) The United States.

(iii) The Commonwealth, its instrumentalities or

political subdivisions.

(2) The term shall include any of the following:

(i) Building machinery and equipment.

(ii) Developed or undeveloped land.

(iii) Streets, roads and highways.

(iv) Parking lots.

(v) Stadiums and stadium seating.

(vi) Recreational courts.

(vii) Sidewalks.

(viii) Foundations, structural supports, walls,

floors, ceilings, roofs and doors.

(ix) Canopies.

(x) Millwork.

(xi) Elevators.

(xii) Windows and external window coverings.

(xiii) Outdoor advertising boards or signs.

(xiv) Airport runways.

(xv) Bridges, dams and dikes.

20250HB1649PN2003 - 54 -

(xvi) Traffic-control devices, including traffic

signs.

(xvii) Satellite dishes and antennas.

(xviii) Guardrail posts.

(xix) Pipes, fittings, pipe supports and hangers.

(xx) Valves.

(xxi) Underground tanks.

(xxii) Wire, conduit, receptacle and junction boxes.

(xxiii) Insulation.

(xxiv) Ductwork and ductwork coverings.

(xxv) A structure or item similar to the items

listed in subparagraphs (i) through (xxiv), whether the

structure or item constitutes a fixture or is affixed to

the real estate, or whether damage would be done to the

structure or item or its surroundings upon removal.

"Resale." As follows:

(1) Any of the following:

(i) A transfer of ownership, custody or possession

of tangible personal property for a consideration,

including the grant of a license to use or consume and

transactions where the possession of the property is

transferred but where the transferor retains title only

as security for payment of the selling price, whether the

transaction is designated as bailment lease, conditional

sale or otherwise.

(ii) The physical incorporation of tangible personal

property as an ingredient or constituent into other

tangible personal property, which is to be sold in the

regular course of business or the performance of those

services described under paragraphs (2), (3) and (4) of

20250HB1649PN2003 - 55 -

the definition of "sale at retail" upon tangible personal

property which is to be sold in the regular course of

business or where the person incorporating the property

has undertaken at the time of purchase to cause the

property to be transported in interstate commerce to a

destination outside this Commonwealth.

(2) The term shall include any of the following:

(i) Telecommunications services purchased by a cable

operator or video programmer that are used to transport

or deliver cable or video programming services which are

sold in the regular course of business.

(ii) Tangible personal property purchased or having

a situs within this Commonwealth solely for the purpose

of being processed, fabricated or manufactured into,

attached to or incorporated into tangible personal

property and then transported outside this Commonwealth

for use exclusively outside this Commonwealth.

(3) The term shall not include the sale of malt or

brewed beverages by a retail dispenser or the sale of liquor

or malt or brewed beverages by a person holding a retail

liquor license within the meaning of the Liquor Code.

(4) The physical incorporation of tangible personal

property as an ingredient or constituent in the construction

of foundations for machinery or equipment the sale or use of

which is excluded from tax under the provisions of paragraph

(2)(ii)(A), (B), (C) or (D) of the definition of "sale at

retail" or paragraph (2)(ii)(A), (B), (C) or (D) of the

definition of "use," whether the foundations at the time of

construction or transfer constitute tangible personal

property or real estate.

20250HB1649PN2003 - 56 -

(5) The term does not include the purchase price or

repair of a shared vehicle by a shared vehicle owner.

"Resident." Any of the following:

(1) A natural person who:

(i) is domiciled in this Commonwealth; or

(ii) maintains a permanent place of residence within

this Commonwealth and spends in the aggregate more than

60 days of the year within this Commonwealth.

(2) A corporation which:

(i) is incorporated under the laws of this

Commonwealth;

(ii) is authorized to do business or doing business

within this Commonwealth; or

(iii) maintains a place of business within this

Commonwealth.

(3) An association, fiduciary, partnership or other

entity which:

(i) is domiciled in this Commonwealth;

(ii) is authorized to do business or doing business

within this Commonwealth; or

(iii) maintains a place of business within this

Commonwealth.

"Sale at retail." As follows:

(1) Any of the following:

(i) A transfer, for a consideration, of the

ownership, custody or possession of tangible personal

property, including the grant of a license to use or

consume whether the transfer is absolute or conditional

and by whatever means in which the transfer is made.

(ii) The rendition of the service of printing or

20250HB1649PN2003 - 57 -

imprinting of tangible personal property for a

consideration for persons who furnish, either directly or

indirectly, the materials used in the printing or

imprinting.

(iii) The rendition for a consideration of the

service of any of the following:

(A) Washing, cleaning, waxing, polishing or

lubricating the motor vehicles of another, whether or

not tangible personal property is transferred.

(B) Inspecting motor vehicles under the

mandatory requirements of 75 Pa.C.S. (relating to

vehicles).

(iv) The rendition for a consideration of the

service of repairing, altering, mending, pressing,

fitting, dyeing, laundering, drycleaning or cleaning

tangible personal property other than wearing apparel or

shoes, or applying or installing tangible personal

property as a repair or replacement part of other

tangible personal property except wearing apparel or

shoes for a consideration, whether the services are

performed directly or by any means other than by coin-

operated self-service laundry equipment for wearing

apparel or household goods and whether tangible personal

property is transferred, except services that are

rendered in the construction, reconstruction, remodeling,

repair or maintenance of real estate. This subparagraph

shall not be deemed to impose tax upon these services in

the preparation for sale of new items which are excluded

from the tax under section 1321(17) (relating to

exclusions) or upon diaper service.

20250HB1649PN2003 - 58 -

(v) The retention of possession, custody or a

license to use or consume tangible personal property or

any further obtaining of services described under

subparagraph (ii), (iii) or (iv) under a rental or

service contract or other arrangement, other than as

security.

(vi) The rendition for a consideration of lobbying

services.

(vii) The rendition for a consideration of

adjustment services, collection services or credit

reporting services.

(viii) The rendition for a consideration of

secretarial or editing services.

(ix) The rendition for a consideration of

disinfecting or pest control services, building

maintenance or cleaning services.

(x) The rendition for a consideration of employment

agency services or help supply services.

(xi) The rendition for a consideration of lawn care

service.

(xii) The rendition for a consideration of self-

storage service.

(xiii) The rendition for a consideration of a mobile

telecommunications service.

(xiv) Car sharing through a shared vehicle owner,

peer-to-peer car-sharing program marketplace facilitator

or rental company.

(2) The term shall not include any of the following:

(i) A transfer of tangible personal property or

rendition of services for the purpose of resale.

20250HB1649PN2003 - 59 -

(ii) Except as provided under paragraph (3), the

rendition of services or the transfer of tangible

personal property including machinery and equipment and

machinery and equipment parts and supplies to be used or

consumed by the purchaser directly in the operations of

any of the following:

(A) The manufacture of tangible personal

property.

(B) Farming, dairying, agriculture, timbering,

horticulture or floriculture when engaged in as a

business enterprise. As used in this clause:

(I) The term "farming" shall include the

propagation and raising of ranch raised fur-

bearing animals and the propagation of game birds

for commercial purposes by holders of propagation

permits issued under 34 Pa.C.S. (relating to

game) and the propagation and raising of horses

to be used exclusively for commercial racing

activities.

(II) The term "timbering" shall include any

of the following, except the harvesting of trees

for clearing land for access roads:

(a) The business of producing or

harvesting trees from forests, woodlots or

tree farms for the purpose of the commercial

production of wood, paper or energy products

derived from wood by a company primarily

engaged in the business of harvesting trees.

(b) All operations prior to the

transport of the harvested product necessary

20250HB1649PN2003 - 60 -

for the removal of timber or forest products

from the site, in-field processing of trees

into logs or chips, complying with

environmental protection and safety

requirements applicable to the harvesting of

forest products, loading of forest products

onto highway vehicles for transport to

storage or processing facilities and

postharvesting site reclamation, including

those activities necessary to improve timber

growth or ensure natural or direct

reforestation of the site.

producing, delivering or rendering of a public

utility service, or in constructing, reconstructing,

remodeling, repairing or maintaining the facilities

which are directly used in producing, delivering or

rendering the service.

(D) Processing.

(3) The exclusions under paragraph (2)(ii)(A), (B), (C)

and (D) shall not apply to any of the following:

(i) A vehicle required to be registered under 75

Pa.C.S., except those vehicles used directly by a public

utility engaged in business as a common carrier or to

maintenance facilities or to materials, supplies or

equipment to be used or consumed in the construction,

reconstruction, remodeling, repair or maintenance of real

estate, other than directly used machinery, equipment,

parts or foundations that may be affixed to the real

estate.

20250HB1649PN2003 - 61 -

(ii) Tangible personal property or services to be

used or consumed in managerial sales or other

nonoperational activities or to the purchase or use of

tangible personal property or services by a person other

than the person directly using the property or services

in the operations described under paragraph (2)(ii)(A),

(B), (C) and (D).

(iii) The services described under any of the

following:

(A) Paragraph (1)(vi), (vii), (viii), (ix), (x),

(xi) and (xii).

(B) The definition of any of the following:

(I) "Adjustment services, collection

services or credit reporting services."

(II) "Building maintenance or cleaning

services."

(III) "Disinfecting or pest control

services," except that the exclusion provided

under this definition for farming, dairying and

agriculture shall apply to disinfecting or pest

control services.

(IV) "Employment agency services."

(V) "Help supply services."

(VI) "Lawn care service."

(VII) "Lobbying services."

(VIII) "Secretarial or editing services."

(IX) "Self-storage service."

(4) The exclusions under paragraph (2)(ii)(C) shall not

apply to any of the following:

(i) Construction materials, supplies or equipment

20250HB1649PN2003 - 62 -

used to construct, reconstruct, remodel, repair or

maintain facilities not used directly by the purchaser in

the production, delivering or rendition of public utility

service.

(ii) Construction materials, supplies or equipment

used to construct, reconstruct, remodel, repair or

maintain a building, road or similar structure.

(iii) Tools and equipment used but not installed in

the maintenance of facilities used directly in the

production, delivering or rendition of a public utility

service.

(5) If tangible personal property or services are

utilized for purposes constituting a sale at retail and for

purposes excluded from the definition of "sale at retail," it

shall be presumed that the tangible personal property or

services are utilized for purposes constituting a sale at

retail and subject to tax unless the user proves to the

department that the predominant purposes for which the

tangible personal property or services are utilized do not

constitute a sale at retail.

(6) With respect to liquor and malt or brewed beverages,

as follows:

(i) The term shall include the sale of liquor by a

Pennsylvania liquor store to a person for any purpose and

the sale of malt or brewed beverages by a manufacturer of

malt or brewed beverages, distributor or importing

distributor to a person for any purpose, except sales by

a manufacturer of malt or brewed beverages to a

distributor or importing distributor or sales by an

importing distributor to a distributor within the meaning

20250HB1649PN2003 - 63 -

of the Liquor Code.

(ii) The term shall not include a sale of malt or

brewed beverages by a retail dispenser or a sale of

liquor or malt or brewed beverages by a person holding a

retail liquor license under the Liquor Code, but shall

include a sale of liquor or malt or brewed beverages

other than under the Liquor Code.

"Secretarial or editing services." As follows:

(1) Providing services that include editing, letter

writing, proofreading, resume writing, typing or word

processing.

(2) The term shall not include court reporting and

stenographic services.

"Self-storage service." As follows:

(1) Providing a building, a room in a building or a

secured area within a building with separate access provided

for each purchaser of self-storage service, primarily for the

purpose of storing personal property.

(2) The term shall not include providing any of the

following:

(i) Safe deposit boxes by financial institutions.

(ii) Storage in refrigerator or freezer units.

(iii) Storage in commercial warehouses.

(iv) Facilities for goods distribution.

(v) Lockers in airports, bus stations, museums and

other public places.

"Shared vehicle." A vehicle that is available for sharing,

including through a peer-to-peer car-sharing program.

"Shared vehicle owner." The registered owner, or a person

designated by the registered owner, of a vehicle made available

20250HB1649PN2003 - 64 -

for sharing, including through a peer-to-peer car-sharing

program.

"Show." An event, the primary purpose of which involves the

display or exhibition of tangible personal property or services

for sale, including a flea market, antique show, coin show,

stamp show, comic book show, hobby show, automobile show, fair

or similar show, whether held regularly or of a temporary

nature, at which more than one vendor displays for sale or sells

tangible personal property or services subject to tax under

Subchapter A of Chapter 13.

"Soft drinks." As follows:

(1) All nonalcoholic beverages, whether carbonated or

not, including any of the following:

(i) Soda water.

(ii) Ginger ale, Coca-Cola, lime cola, Pepsi, Dr.

Pepper and root beer.

(iii) Fruit juice when plain or when carbonated

water, flavoring or syrup is added.

(iv) Carbonated water.

(v) Orangeade and lemonade.

(vi) Other preparations and beverages commonly

referred to as soft drinks, which are made with or

without the use of any syrup.

(2) The term shall not include any of the following:

(i) Natural fruit or vegetable juices or their

concentrates.

(ii) Noncarbonated fruit juice drinks containing not

less than 25% by volume of natural fruit juices or of

fruit juice which has been reconstituted to its original

state, or natural concentrated fruit or vegetable juices

20250HB1649PN2003 - 65 -

reconstituted to their original state, whether any of the

natural juices are frozen or unfrozen, sweetened or

unsweetened, seasoned with salt or spice or unseasoned.

(iii) Coffee, coffee substitutes, tea or cocoa.

(iv) Natural fluid milk or noncarbonated drinks made

from milk derivatives.

"Storage." As follows:

(1) The keeping or retention of tangible personal

property within this Commonwealth for any purpose, including

the interim keeping, retaining or exercising a right or power

over the tangible personal property.

(2) The term is not limited to the provision of self-

storage service.

"Tangible personal property." As follows:

(1) Corporeal personal property, including any of the

following:

(i) Goods, wares and merchandise.

(ii) Steam and natural, manufactured and bottled gas

for nonresidential use.

(iii) Electricity for nonresidential use.

(iv) Prepaid telecommunications.

(v) Premium cable or premium video programming

service.

(vi) Spirituous or vinous liquor, malt or brewed

beverages and soft drinks.

(vii) Interstate telecommunications service

originating or terminating in this Commonwealth and

charged to a service address in this Commonwealth.

(viii) Intrastate telecommunications service with

the exception of:

20250HB1649PN2003 - 66 -

(A) Subscriber line charges and basic local

telephone service for residential use.

(B) Charges for telephone calls paid for by

inserting money into a telephone accepting direct

deposits of money to operate if the service address

of an intrastate telecommunications service is deemed

to be within this Commonwealth or within a political

subdivision, regardless of how or where billed or

paid. In the case of an interstate or intrastate

telecommunications service, a charge paid through a

credit or payment mechanism which does not relate to

a service address, such as a bank, travel, credit or

debit card, but not including prepaid

telecommunications, is deemed attributable to the

address of origination of the telecommunications

service.

(2) The term shall include the following, whether

electronically or digitally delivered, streamed or accessed

and whether purchased singly, by subscription or in any other

manner, including maintenance and updates:

(i) Video.

(ii) Photographs.

(iii) Books.

(iv) Other taxable printed matter.

(v) Applications, commonly known as apps.

(vi) Games.

(vii) Music.

(viii) Other audio, including satellite radio

service.

(ix) Canned software, notwithstanding the function

20250HB1649PN2003 - 67 -

performed, including support, except separately invoiced

help desk or call center support.

(x) Other taxable tangible personal property

electronically or digitally delivered, streamed or

accessed.

"Taxpayer." A person required to pay or collect the tax

imposed by this subpart, including a marketplace facilitator, a

marketplace seller , a peer-to-peer car-sharing program

marketplace facilitator and a shared vehicle owner .

"Telecommunications service." As follows:

(1) A one-way transmission or a two-way, interactive

transmission of sounds, signals or other intelligence

converted to like form which effects or is intended to effect

meaningful communications by electronic or electromagnetic

means via wire, cable, satellite, light waves, microwaves,

radio waves or other transmission media.

(2) The term shall include any of the following:

(i) Local, toll, wide-area or any other type of

telephone service.

(ii) Private line service.

(iii) Telegraph service.

(iv) Radio repeater service.

(v) Wireless communication service.

(vi) Personal communications system service.

(vii) Cellular telecommunication service.

(viii) Specialized mobile radio service.

(ix) Stationary two-way radio service.

(x) Paging service.

(3) The term shall not include any of the following:

(i) Subscriber charges for access to a video dial

20250HB1649PN2003 - 68 -

tone system.

(ii) Charges to video programmers for the transport

of video programming.

(iii) Charges for access to the Internet. Access to

the Internet shall not include any of the following:

(A) The transport over the Internet or a

proprietary network using the Internet protocol of

telephone calls, facsimile transmissions or other

telecommunications traffic to or from end users on

the public switched telephone network if the signal

sent from or received by an end user is not in an

Internet protocol.

(B) Telecommunications service purchased by an

Internet service provider to deliver access to the

Internet to its customers.

(iv) Mobile telecommunications service.

"Transient vendor." As follows:

(1) A person who satisfies all of the following

conditions:

(i) Brings into this Commonwealth, by automobile,

truck or other means of transportation, or purchases in

this Commonwealth, tangible personal property the sale or

use of which is subject to the tax imposed by this part

or comes into the Commonwealth to perform services the

sale or use of which is subject to the tax imposed by

this part.

(ii) Offers or intends to offer tangible personal

property or services for sale at retail within this

Commonwealth.

(iii) Does not maintain an established office,

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distribution house, saleshouse, warehouse, service

enterprise, residence from which business is conducted or

other place of business within this Commonwealth.

(2) The term shall not include a person who:

(i) delivers tangible personal property within this

Commonwealth under orders for the property which were

solicited or placed by mail or other means; or

(ii) handcrafts items for sale at special events,

including, but not limited to, fairs, carnivals, art and

craft shows and other festivals and celebrations within

this Commonwealth.

"Use." As follows:

(1) Any of the following:

(i) The exercise of a right or power incidental to

the ownership, custody or possession of tangible personal

property, including transportation, storage or

consumption.

(ii) The obtaining by a purchaser of the service of

any of the following:

(A) Printing or imprinting of tangible personal

property when the purchaser furnishes, either

directly or indirectly, the articles used in the

printing or imprinting.

(B) Washing, cleaning, waxing, polishing or

lubricating of motor vehicles, whether a tangible

personal property is transferred to the purchaser in

conjunction with the services.

mandatory requirements of 75 Pa.C.S.

(D) Repairing, altering, mending, pressing,

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fitting, dyeing, laundering, drycleaning or cleaning

tangible personal property other than wearing apparel

or shoes or applying or installing tangible personal

property as a repair or replacement part of other

tangible personal property other than wearing apparel

or shoes, whether the services are performed directly

or by any means other than by means of coin-operated

self-service laundry equipment for wearing apparel or

household goods, and whether tangible personal

property is transferred to the purchaser in

conjunction with the services, except the services as

are obtained in the construction, reconstruction,

remodeling, repair or maintenance of real estate.

This clause shall not be deemed to impose tax upon

these services in the preparation for sale of new

items which are excluded from the tax under section

1321(17) or upon diaper service.

(iii) The obtaining by the purchaser of lobbying

services.

(iv) The obtaining by the purchaser of adjustment

services, collection services or credit reporting

services.

(v) The obtaining by the purchaser of secretarial or

editing services.

(vi) The obtaining by the purchaser of disinfecting

or pest control services, building maintenance or

cleaning services.

(vii) The obtaining by the purchaser of employment

agency services or help supply services.

(viii) The obtaining by the purchaser of lawn care

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service.

(ix) The obtaining by the purchaser of self-storage

service.

(x) The obtaining by a construction contractor of

tangible personal property or services provided to

tangible personal property which will be used under a

construction contract whether or not the tangible

personal property or services are transferred.

(xi) The obtaining of mobile telecommunications

service by a customer.

(xii) Car sharing through a shared vehicle owner,

peer-to-peer car-sharing program marketplace facilitator

or rental company.

(2) The term shall not include any of the following:

(i) Tangible personal property acquired and kept,

retained or over which power is exercised within this

Commonwealth on which the taxing of the storage, use or

other consumption is expressly prohibited by the

Constitution of the United States or which is excluded

from tax under other provisions of this subpart.

(ii) Except as provided under paragraph (3), the use

or consumption of tangible personal property, including

machinery and equipment and machinery and equipment parts

and supplies or the obtaining of the services described

under paragraph (1)(ii)(A), (B), (C) or (D) directly in

the operations of any of the following:

(A) The manufacture of tangible personal

property.

(B) Farming, dairying, agriculture, timbering,

horticulture or floriculture when engaged in as a

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business enterprise. As used in this clause:

(I) The term "farming" shall include the

propagation and raising of ranch-raised

furbearing animals and the propagation of game

birds for commercial purposes by holders of

propagation permits issued under 34 Pa.C.S. and

the propagation and raising of horses to be used

exclusively for commercial racing activities.

(II) The term "timbering" shall include any

of the following, except the harvesting of trees

for clearing land for access roads:

(a) The business of producing or

harvesting trees from forests, woodlots or

tree farms for the purpose of the commercial

production of wood, paper or energy products

derived from wood by a company primarily

engaged in the business of harvesting trees.

(b) All operations prior to the

transport of the harvested product necessary

for the removal of timber or forest products

from the site, in-field processing of trees

into logs or chips, complying with

environmental protection and safety

requirements applicable to the harvesting of

forest products, loading of forest products

onto highway vehicles for transport to

storage or processing facilities and

postharvesting site reclamation, including

those activities necessary to improve timber

growth or ensure natural or direct

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reforestation of the site. The term shall not

include the harvesting of trees for clearing

land for access roads.

producing, delivering or rendering of a public

utility service or in constructing, reconstructing,

remodeling, repairing or maintaining the facilities

which are directly used in producing, delivering or

rendering the service.

(D) Processing.

(iii) The providing of a motor vehicle to a

nonprofit private or public school to be used by the

school for the sole purpose of driver education.

(3) The exclusions provided under paragraph (2)(ii)

shall not apply to any of the following:

(i) A vehicle required to be registered under 75

Pa.C.S. except those vehicles directly used by a public

utility engaged in the business as a common carrier.

(ii) Maintenance facilities.

(iii) Materials, supplies or equipment to be used or

consumed in the construction, reconstruction, remodeling,

repair or maintenance of real estate other than directly

used machinery, equipment, parts or foundations for the

maintenance of real estate that may be affixed to the

real estate.

(iv) Tangible personal property or services to be

used or consumed in managerial sales or other

nonoperational activities or to the purchase or use of

tangible personal property or services by a person other

than the person directly using the same in the operations

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described under paragraph (2)(ii).

(v) The services described under any of the

following:

(A) Paragraph (1)(vi), (vii), (viii), (ix), (x)

or (xi).

(B) The definition of any of the following:

(I) "Adjustment services, collection

services or credit reporting services."

(II) "Building maintenance or cleaning

services."

(III) "Disinfecting or pest control

services," except that the exclusion provided

under this definition for farming, dairying and

agriculture shall apply to disinfecting or pest

control services.

(IV) "Employment agency services."

(V) "Help supply services."

(VI) "Lawn care service."

(VII) "Lobbying services."

(VIII) "Secretarial or editing service."

(IX) "Self-storage service."

(4) The exclusion provided under paragraph (2)(ii)(C)

shall not apply to any of the following:

(i) Construction materials, supplies or equipment

used to construct, reconstruct, remodel, repair or

maintain facilities not used directly by the purchaser in

the production, delivering or rendition of public utility

service.

(ii) Tools and equipment used but not installed in

the maintenance of facilities used directly in the

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production, delivering or rendition of a public utility

service.

(5) Where tangible personal property or services are

utilized for purposes constituting a use, and for purposes

excluded from the definition of "use," it shall be presumed

that the property or services are utilized for purposes

constituting a sale at retail and subject to tax unless the

user proves to the department that the predominant purposes

for which the property or services are utilized do not

constitute a sale at retail.

(6) With respect to liquor and malt or brewed beverages,

as follows:

(i) The term shall include the purchase of liquor

from a Pennsylvania liquor store by a person for any

purpose and the purchase of malt or brewed beverages from

a manufacturer of malt or brewed beverages, distributor

or importing distributor by a person for any purpose,

except purchases from a manufacturer of malt or brewed

beverages by a distributor or importing distributor, or

purchases from an importing distributor by a distributor

within the meaning of the Liquor Code.

(ii) The term shall not include a purchase of malt

or brewed beverages from a retail dispenser or a purchase

of liquor or malt or brewed beverages from a person

holding a retail liquor license under the Liquor Code,

but shall include the exercise of a right or power

incidental to the ownership, custody or possession of

liquor or malt or brewed beverages obtained by the person

exercising the right or power in any manner other than

under the Liquor Code.

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(7) The use of tangible personal property purchased at

retail upon which the services described under paragraph (1)

(ii) have been performed shall be deemed to be a use of the

services by the person using the property.

"Used prebuilt housing." Prebuilt housing that was

previously subject to a sale to a prebuilt housing purchaser.

"Vendor." A person maintaining a place of business in this

Commonwealth, selling or leasing tangible personal property or

rendering services, the sale or use of which is subject to the

tax imposed by this subpart, including a marketplace

facilitator, a marketplace seller, peer-to-peer car-sharing

program marketplace facilitator or shared vehicle owner, but not

including an employee who, in the ordinary scope of employment,

renders services to an employer in exchange for wages and

salaries.

CHAPTER 13

TAXATION GENERALLY

Subchapter

A. Imposition of Tax

B. Computation of Tax

C. Exclusions from Tax

D. Licenses

E. Hotel Occupancy Tax

F. Remote Sellers

SUBCHAPTER A

IMPOSITION OF TAX

Sec.

1301. Sale of tangible personal property or services.

1302. Use of tangible personal property or services.

1303. Telecommunications service.

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1304. Coin-operated vending machines.

1305. Prepaid telecommunications.

1306. Prepaid mobile communications service.

1307. Prebuilt housing.

1308. Mobile telecommunications services.

1309. Malt or brewed beverages.

§ 1301. Sale of tangible personal property or services.

(a) Imposition.--There is imposed upon each separate sale at

retail of tangible personal property or services within this

Commonwealth a tax of 6% of the purchase price.

(b) Collection.--The tax under this section shall, except as

otherwise provided, be collected by the vendor or other person

required by this part from the purchaser and shall be paid to

the Commonwealth as provided in this subpart.

§ 1302. Use of tangible personal property or services.

(a) Imposition.--There is imposed upon the use, on or after

the effective date of this section, within this Commonwealth of

tangible personal property purchased at retail on or after the

effective date of this section and on those services described

in this chapter and purchased at retail on or after the

effective date of this section a tax of 6% of the purchase

price.

(b) Collection.--The tax under this section shall, except as

otherwise provided, be paid to the Commonwealth by the person

who makes the use as provided under subsection (a), except that

the tax shall not be paid to the Commonwealth by the person if

the person has paid the tax imposed by section 1301 (relating to

sale of tangible personal property or services) or has paid the

tax imposed by this section to the vendor with respect to the

use or the vendor advertises or holds out or states to the

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person directly or indirectly subject to the conditions

specified in section 1584(b) (relating to crimes) that the

vendor will pay the tax imposed by section 1301 or this section

for the person. The tax at the rate of 6% imposed by this

section shall not be deemed applicable if the tax has been

incurred under the former act of March 6, 1956 (1955 P.L.1228,

No.381), known as the Tax Act of 1963 for Education.

§ 1303. Telecommunications service.

(a) Imposition.--Subject to subsection (b), notwithstanding

any other provision of this subpart, except for telegrams paid

for in cash at telegraph offices, the tax with respect to

telecommunications service shall be computed at the rate of 6%

upon the total amount charged to customers for the services,

irrespective of whether the charge is based upon a flat rate or

upon a message unit charge.

(b) Exception.--Charges for telephone calls paid for by

inserting money into a telephone accepting direct deposits of

money to operate shall not be subject to the tax under this

section.

have no responsibility or liability to the Commonwealth for

billing, collecting or remitting taxes that apply to services,

products or other commerce sold over telecommunications lines by

third-party vendors.

(d) Credit.--To prevent actual multistate taxation of

interstate telecommunications service, a taxpayer, upon proof

that the taxpayer has paid a similar tax to another state on the

same interstate telecommunications service, shall be allowed a

credit against the tax imposed by this section on the same

interstate telecommunications service to the extent of the

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amount of the tax properly due and paid to the other state.

§ 1304. Coin-operated vending machines.

Notwithstanding any other provision of this subpart, the sale

or use of food and beverages dispensed by means of a coin-

operated vending machine shall be taxed at the rate of 6% of the

receipts collected from the machine which dispenses food and

beverages taxable under this subpart.

§ 1305. Prepaid telecommunications.

(a) Imposition.--Notwithstanding any provision of this

subpart, the sale or use of prepaid telecommunications evidenced

by the transfer of tangible personal property shall be subject

to the tax imposed by sections 1301 (relating to sale of

tangible personal property or services) and 1302 (relating to

use of tangible personal property or services).

(b) Transfer of tangible personal property.--

(1) Subject to paragraph (2), the sale or use of prepaid

telecommunications not evidenced by the transfer of tangible

personal property shall be subject to the tax imposed by

sections 1301 and 1302 and shall be deemed to occur at the

purchaser's billing address.

(2) Notwithstanding paragraph (1), the sale or use of

prepaid telecommunications service not evidenced by the

transfer of tangible personal property shall be taxed at the

rate of 6% of the receipts collected on each sale if the

service provider elects to collect the tax imposed by this

subpart on receipts of each sale. The service provider shall

notify the department of the service provider's election and

shall collect the tax on receipts of each sale until the

service provider notifies the department otherwise.

§ 1306. Prepaid mobile communications service.

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(a) Imposition.--Notwithstanding any other provision of this

subpart, the sale or use of prepaid mobile telecommunications

service evidenced by the transfer of tangible personal property

shall be subject to the tax imposed by sections 1301 (relating

to sale of tangible personal property or services) and 1302

(relating to use of tangible personal property or services).

(b) Transfer of tangible personal property.--

(1) Subject to paragraph (2), the sale or use of prepaid

mobile telecommunications service not evidenced by the

transfer of tangible personal property shall be subject to

the tax imposed by sections 1301 and 1302 and shall be deemed

to occur at the purchaser's billing address or the location

associated with the mobile telephone number or the point of

sale, whichever is applicable.

(2) Notwithstanding paragraph (1), the sale or use of

prepaid mobile telecommunications service not evidenced by

the transfer of tangible personal property shall be taxed at

the rate of 6% of the receipts collected on each sale if the

service provider elects to collect the tax imposed by this

subpart on receipts of each sale. The service provider shall

notify the department of the service provider's election and

shall collect the tax on receipts of each sale until the

service provider notifies the department otherwise.

§ 1307. Prebuilt housing.

Notwithstanding any other provision of this subpart, tax with

respect to sales of prebuilt housing shall be imposed on the

prebuilt housing builder at the time of the prebuilt housing

sale within this Commonwealth and shall be paid and reported by

the prebuilt housing builder to the department in the time and

manner provided in this subpart, but a manufacturer of prebuilt

20250HB1649PN2003 - 81 -

housing may, at its option, precollect the tax from the prebuilt

housing builder at the time of sale to the prebuilt housing

builder. In any case where prebuilt housing is purchased and the

tax is not paid by the prebuilt housing builder or precollected

by the manufacturer, the prebuilt housing purchaser shall remit

tax directly to the department if the prebuilt housing is used

in this Commonwealth without regard to whether the prebuilt

housing becomes a real estate structure.

§ 1308. Mobile telecommunications services.

Notwithstanding any other provisions of this subpart and in

accordance with the Mobile Telecommunications Sourcing Act, the

sale or use of mobile telecommunications services which are

deemed to be provided to a customer by a home service provider

under section 117 of the Mobile Telecommunications Sourcing Act

shall be subject to the tax of 6% of the purchase price, which

tax shall be collected by the home service provider from the

customer and shall be paid over to the Commonwealth as provided

in this subpart if the customer's place of primary use is

located within this Commonwealth, regardless of where the mobile

telecommunications services originate, terminate or pass

through. For purposes of this section, words and phrases used in

this section shall have the same meanings given to them in the

Mobile Telecommunications Sourcing Act.

§ 1309. Malt or brewed beverages.

(a) Imposition.--The tax shall be imposed on a manufacturer

of malt or brewed beverages with respect to sales of malt or

brewed beverages sold by the manufacturer directly to the

ultimate consumer for consumption on or off premises

notwithstanding any of the following:

(1) Any other provision of this subpart.

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(2) Article II-B of the Tax Reform Code of 1971.

(3) The act of July 28, 1953 (P.L.723, No.230), known as

the Second Class County Code.

(4) Chapter 5 or Chapter 6 of the act of June 5, 1991

(P.L.9, No.6), known as the Pennsylvania Intergovernmental

Cooperation Authority Act for Cities of the First Class.

(b) Payment.--The tax imposed under subsection (a) shall be

paid and reported by the manufacturer of malt or brewed

beverages to the department in the time and manner provided in

this subpart.

local government authorized to impose a local alcoholic beverage

tax under the act of June 10, 1971 (P.L.153, No.7), known as the

First Class School District Liquor Sales Tax Act of 1971, or 53

Pa.C.S. § 8602 (relating to local financial support) may impose

or continue to impose a local alcoholic beverage tax on the sale

at retail of malt or brewed beverages made by a manufacturer of

malt or brewed beverages to the ultimate consumer for

consumption on or off premises at the same rate as authorized

under the First Class School District Liquor Sales Tax Act of

1971 or 53 Pa.C.S. § 8602 and notwithstanding anything to the

contrary in such laws or in a local law or ordinance in

existence on the effective date of this section.

(d) Effect of payment.--The payment of the tax imposed under

subsection (a) shall eliminate the need for the ultimate

consumer to pay or remit a sales or use tax on the related

transaction or upon the subsequent use of the malt or brewed

beverages.

SUBCHAPTER B

COMPUTATION OF TAX

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Sec.

1311. Computation.

§ 1311. Computation.

The amount of tax imposed by Subchapter A (relating to

imposition of tax) shall be computed as follows:

(1) If the purchase price is 10¢ or less, no tax shall

be collected.

(2) If the purchase price is 11¢ or more but less than

18¢, 1¢ shall be collected.

(3) If the purchase price is 18¢ or more but less than

35¢, 2¢ shall be collected.

(4) If the purchase price is 35¢ or more but less than

51¢, 3¢ shall be collected.

(5) If the purchase price is 51¢ or more but less than

68¢, 4¢ shall be collected.

(6) If the purchase price is 68¢ or more but less than

85¢, 5¢ shall be collected.

(7) If the purchase price is 85¢ or more but less than

$1.01, 6¢ shall be collected.

(8) If the purchase price is more than $1, 6% of each

dollar of purchase price plus the bracket charges under

paragraphs (1), (2), (3), (4), (5), (6) and (7) upon any

fractional part of a dollar in excess of even dollars shall

be collected.

SUBCHAPTER C

EXCLUSIONS FROM TAX

Sec.

1321. Exclusions.

1322. Alternate imposition of tax and credits.

1323. Credit against tax.

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§ 1321. Exclusions.

The tax imposed under Subchapter A (relating to imposition of

tax) shall not be imposed upon any of the following:

(1) The sale at retail or use of tangible personal

property, other than a motor vehicle, trailer, semitrailer,

motor boat, aircraft or other similar tangible personal

property required under either Federal law or the laws of

this Commonwealth to be registered or licensed, or a service

sold by or purchased from a person not a vendor in an

isolated transaction or sold by or purchased from a person

who is a vendor but is not a vendor with respect to the

tangible personal property or service sold or purchased in

the transaction, provided that inventory and stock in trade

sold or purchased shall not be excluded from the tax by the

provisions of this section.

(2) The use of tangible personal property purchased by a

nonresident person outside this Commonwealth and brought into

this Commonwealth for use in this Commonwealth for a period

not to exceed seven days or for any period of time when the

nonresident is a tourist or vacationer and, in either case,

not consumed within this Commonwealth.

(3) The use of tangible personal property purchased

outside this Commonwealth for use outside this Commonwealth

by a then-nonresident natural person or a business entity not

actually doing business within this Commonwealth, who later

brings the tangible personal property into this Commonwealth

in connection with the establishment of a permanent business

or residence in this Commonwealth, if the property was

purchased more than six months prior to the date it was first

brought into this Commonwealth or prior to the establishment

20250HB1649PN2003 - 85 -

of the business or residence, whichever occurs first. This

exclusion shall not apply to tangible personal property

temporarily brought into this Commonwealth for the

performance of contracts for the construction,

reconstruction, remodeling, repairing and maintenance of real

estate.

(4) The sale at retail or use of any of the following:

(i) Disposable diapers.

(ii) Premoistened wipes.

(iii) Incontinence products.

(iv) Colostomy deodorants.

(v) Toilet paper.

(vi) Sanitary napkins, tampons or similar items used

for feminine hygiene.

(vii) Toothpaste, toothbrushes or dental floss.

(5) The sale at retail or use of any of the following:

(i) Any of the following when purchased directly by

the user solely for the user's own residential use:

(A) Steam.

(B) Natural, manufactured and bottled gas.

(D) Electricity.

(E) Intrastate subscriber line charges, basic

local telephone service or telegraph service.

(ii) Charges for a telephone call paid for by

inserting money into a telephone accepting direct

deposits of money to operate.

(6) The sale at retail to or use of tangible personal

property or services other than under a construction

contract. The following apply:

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(i) The exclusion under this paragraph applies to

any of the following:

(A) A charitable organization.

(B) A volunteer firefighters' organization.

as defined in 35 Pa.C.S. § 7412 (relating to

definitions).

(D) A nonprofit educational institution.

(E) A religious organization for religious

purposes.

(ii) The exclusion under this paragraph shall not

apply with respect to any of the following:

(A) Tangible personal property or services used

in an unrelated trade or business carried on by the

organization or institution.

(B) Materials, supplies and equipment used and

transferred to the organization or institution in the

construction, reconstruction, remodeling, renovation,

repairs and maintenance of a real estate structure,

other than building machinery and equipment, except

materials and supplies when purchased by the

organization or institution for routine maintenance

and repairs.

(iii) If the department has issued sales tax-exempt

status to a volunteer firefighters' organization or a

volunteer firefighters' relief association, the sales

tax-exempt status may not expire unless the activities of

the organization or association change so that the

organization or association does not qualify as an

institution of purely public charity, in which case the

20250HB1649PN2003 - 87 -

organization or association shall immediately notify the

department of the change.

(iv) If the department ascertains that an

organization or association no longer qualifies as an

institution of purely public charity, the department may

revoke the sales tax-exempt status of the organization or

association.

(7) The sale at retail or use of gasoline and other

motor fuels, the sales of which are otherwise subject to

excise taxes under 75 Pa.C.S. Ch. 90 (relating to liquid

fuels and fuels tax).

(8) The sale at retail to or use by the United States,

this Commonwealth or the Commonwealth's instrumentalities or

political subdivisions of tangible personal property or

services.

(9) The sale at retail or use of wrapping paper,

wrapping twine, bags, cartons, tape, rope, labels,

nonreturnable containers, all other wrapping supplies and

kegs used to contain malt or brewed beverages, if the use is

incidental to the delivery of personal property. A charge for

wrapping or packaging shall be subject to tax at the rate

imposed by Subchapter B (relating to computation of tax)

unless the property wrapped or packaged will be resold by the

purchaser of the wrapping or packaging service. As used in

this paragraph, the term "carton" includes a corrugated box

used by a person engaged in the manufacture of snack food

products to deliver the manufactured product, whether or not

the box is returnable for potential reuse.

(10) The sale at retail or use of a vessel designed for

commercial use of registered tonnage of 50 tons or more if

20250HB1649PN2003 - 88 -

produced by the builders of the vessel upon special order of

the purchaser.

(11) The sale at retail of tangible personal property or

services used or consumed in building, rebuilding, repairing,

making an addition to or making a replacement in and upon a

vessel designed for commercial use of registered tonnage of

50 tons or more upon special order of the purchaser or if the

vessel is rebuilt, repaired or enlarged or when a replacement

is made to the vessel upon order of or for the account of the

owner.

(12) The sale at retail or use of tangible personal

property or services used or consumed for ship cleaning or

maintenance or as fuel, supplies, ships' equipment, ships'

stores or sea stores on a vessel designed for commercial use

of registered tonnage of 50 tons or more to be operated

principally outside the limits of this Commonwealth.

(13) The sale at retail or use of any of the following:

(i) Prescription or nonprescription medicines, drugs

or medical supplies.

(ii) Crutches and wheelchairs for the use of

individuals with disabilities.

(iii) An artificial limb, artificial eye and

artificial hearing device if designed to be worn on the

person of the purchaser or user.

(iv) False teeth and materials used by a dentist in

dental treatment.

(v) Eyeglasses if especially designed or prescribed

by an ophthalmologist, oculist or optometrist for the

personal use of the owner or purchaser.

(vi) Artificial braces and supports designed solely

20250HB1649PN2003 - 89 -

for the use of individuals with disabilities.

(vii) Any other therapeutic, prosthetic or

artificial device designed for the use of a particular

individual to correct or alleviate a physical incapacity,

including a hospital bed, iron lung and kidney machine.

(14) The sale at retail or use of coal.

(15) The sale at retail or use of a motor vehicle,

trailer and semitrailer, or a body attached to the chassis of

a motor vehicle, trailer or semitrailer, which is:

(i) sold to a nonresident of this Commonwealth to be

used outside this Commonwealth; and

(ii) registered in a state other than this

Commonwealth within 20 days after delivery to the vendee.

(16) The sale at retail or use of water.

(17) As follows:

(i) Except as provided under subparagraph (ii), the

sale at retail or use of all vesture, wearing apparel,

raiments, garments, footwear and other articles of

clothing, including clothing patterns and items that are

to be a component part of clothing, worn or carried on or

about the human body.

(ii) The following shall not be excluded from the

tax under this subpart:

(A) An accessory, ornamental wear, formal day or

evening apparel or article made of fur on the hide or

pelt or a material imitative of fur and an article of

which the real, imitation or synthetic fur is the

component material of chief value if the value is

more than three times the value of the next most

valuable component material.

20250HB1649PN2003 - 90 -

(B) Sporting goods and clothing not normally

used or worn by an individual who is not engaged in

sports.

(18) The sale at retail or use of religious publications

sold by religious groups, Bibles or religious articles.

(19) As follows:

(i) (A) Except as provided for under subparagraph

(ii), the sale at retail or use of food and beverages for

human consumption.

(B) The sale at retail of food and beverages at

or from a school or church in the ordinary course of

the activities of the school or church.

(ii) The exclusion under subparagraph (i)(A) shall

not apply with respect to any of the following:

(A) Soft drinks.

(B) Malt and brewed beverages and spirituous and

vinous liquors.

(I) Food or beverages, whether sold for

consumption on or off the premises, on a take-out

or to-go basis or delivered to the purchaser or

consumer if purchased from a person engaged in

the business of catering or from a person engaged

in the business of operating an establishment

where ready-to-eat food and beverages are sold.

(II) For purposes of this subclause:

(a) An establishment under subparagraph

(I) shall include a restaurant, cafe, lunch

counter, private and social club, tavern,

dining car, hotel, night club, fast food

20250HB1649PN2003 - 91 -

operation, pizzeria, fair, carnival, lunch

cart, ice cream stand, snack bar, cafeteria,

employee cafeteria, theater, stadium, arena,

amusement park, carryout shop, coffee shop or

other similar establishment, whether mobile

or immobile.

(b) A bakery, pastry shop, donut shop,

delicatessen, grocery store, supermarket,

farmer's market, convenience store or vending

machine shall not be considered an

establishment under subparagraph (I) from

which food or beverages ready-to-eat are sold

except for the sale of meals, sandwiches,

food from salad bars, hand-dipped or hand-

served ice-based products, including ice

cream and yogurt, hot soup, hot pizza and

other hot food items, brewed coffee and hot

beverages.

shall not include malt and brewed beverages

and spirituous and vinous liquors, but shall

include soft drinks.

(20) The sale at retail or use of a newspaper, including

printed advertising materials circulated with the newspaper,

regardless of where or by whom the printed advertising

material was produced. As used in this paragraph, "newspaper"

means a legal newspaper or a publication containing matters

of general interest and reports of current events which

qualifies as a newspaper of general circulation authorized to

carry a legal advertisement as those terms are defined in 45

20250HB1649PN2003 - 92 -

Pa.C.S. § 101 (relating to definitions), not including

magazines.

(21) The sale at retail or use of a casket and burial

vault for human remains and a marker and tombstone for human

graves.

(22) The sale at retail or use of flags of the United

States of America and the Commonwealth of Pennsylvania.

(23) The sale at retail or use of textbooks for use in a

public or private school, college or university if purchased

on behalf of or through the school, college or university and

the school, college or university is recognized by the

Department of Education.

(24) The sale at retail or use of motion picture film

rented or licensed from a distributor for the purpose of

commercial exhibition.

(25) The sale at retail or use of a mail order catalog

and direct mail advertising literature or materials,

including electoral literature or materials, such as

envelopes, address labels and a one-time license to use a

list of names and mailing addresses for each delivery of

direct mail advertising literature or materials, including

electoral literature or materials, through the United States

Postal Service.

(26) The sale at retail or use of rail transportation

equipment used in the movement of personal property.

(27) The sale at retail of a bus to be used under

contract with a school district that is a replacement for a

bus destroyed or lost in the flood of 1977 for a period

ending December 31, 1977, in the counties of Armstrong,

Bedford, Cambria, Indiana, Jefferson, Somerset and

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Westmoreland, or the use of the bus.

(28) The sale at retail of a horse if, at the time of

purchase, the seller is directed to ship or deliver the horse

to an out-of-State location, whether or not the charges for

shipment are paid for by the seller or the purchaser. The

following apply:

(i) The seller shall obtain a bill of lading, either

from the carrier or from the purchaser, who, in turn, has

obtained the bill of lading from the carrier reflecting

delivery to the out-of-State address to which the horse

has been shipped. The seller shall execute a Certificate

of Delivery to Destination Outside of the Commonwealth

form for each bill of lading reflecting out-of-State

delivery. The seller shall be required to retain the

certificate of delivery form to justify the noncollection

of sales tax with respect to the transaction to which the

form relates.

(ii) In a transaction where a horse is sold by the

seller and delivered to a domiciled person, agent or

corporation prior to the horse being delivered to an out-

of-State location, the Certificate of Delivery to

Destination Outside of the Commonwealth form must have

attached to it bills of lading both for the transfer to

the domiciled person, agent or corporation and from the

domiciled person, agent or corporation to the out-of-

State location.

(29) The sale at retail or use of fish feed purchased by

or on behalf of sportsmen's clubs, fish cooperatives or

nurseries approved by the Pennsylvania Fish and Boat

Commission.

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(30) The sale at retail of supplies and materials to

tourist promotion agencies that receive grants from the

Commonwealth for distribution to the public as promotional

material or the use of the supplies and materials by a

tourist promotion agency.

(31) The sale at retail of supplies and materials to

tourist promotion agencies that receive grants from the

Commonwealth for distribution to the public as promotional

material or the use of the supplies and materials by a

tourist promotion agency.

(32) The sale or use of brook trout (salvelinus

fontinalis), brown trout (Salmo trutta) or rainbow trout

(Salmo gairdneri).

(33) The sale at retail or use of a bus to be used

exclusively for the transportation of children for school

purposes.

(34) The sale at retail or use of firewood. For the

purpose of this paragraph, "firewood" means the product of

trees when severed from the land and cut into proper lengths

for burning and pellets made from pure wood sawdust if used

for fuel for cooking or hot water production or to heat a

residential dwelling.

(35) The sale at retail or use of materials used in the

construction and erection of objects purchased by not-for-

profit organizations for purposes of commemoration and

memorialization of historical events, if the object is

erected upon publicly owned property or property to be

conveyed to a public entity upon the commemoration or

memorialization of the historical event.

(36) The sale at retail or use of food or beverages or

20250HB1649PN2003 - 95 -

other tangible personal property purchased in accordance with

the Supplemental Nutrition Assistance Program (SNAP) under 7

U.S.C. Ch. 51 (relating to Supplemental Nutrition Assistance

Program).

(37) The sale at retail or use of food and beverages by

nonprofit associations which support sports programs or youth

centers. As used in this paragraph:

(i) "Nonprofit association" means an entity which is

organized as a nonprofit corporation or nonprofit

unincorporated association under the laws of this

Commonwealth or the United States or an entity which is

authorized to do business in this Commonwealth as a

nonprofit corporation or unincorporated association under

the laws of this Commonwealth, including a youth or

athletic association, volunteer fire association,

ambulance association, religious organization, charitable

organization, fraternal organization, veterans

organization, civic association and a separately

chartered auxiliary of the association or organization,

if organized and operated on a nonprofit basis.

(ii) "Sports program" means baseball, softball,

football, basketball, soccer and any other competitive

sport formally recognized as a sport by the United States

Olympic Committee as specified by and under the

jurisdiction of 36 U.S.C. Ch. 2205 (relating to United

States Olympic and Paralympic Committee), the Amateur

Athletic Union or the National Collegiate Athletic

Association. The term shall be limited to a program or a

portion of a program that is organized for recreational

purposes and whose activities are substantially for those

20250HB1649PN2003 - 96 -

purposes and which is primarily for participants who are

18 years of age or younger or whose 19th birthday occurs

during the year of participation or the competitive

season, whichever is longer. There shall be no age

limitation for a program operated for persons with a

physical or intellectual disability.

(iii) "Support" means:

(A) that the funds raised from sales are used to

pay the expenses of a sports program or a youth

center; or

(B) the nonprofit association sells food and

beverages at a youth center or a location where a

sports program is being conducted under this subpart.

(iv) "Youth center" means a fixed location used

exclusively for programs for individuals who are 19 years

of age or younger as long as the programs are:

(A) conducted primarily by volunteers;

(B) designed to advance recreational, civic or

moral objectives; and

qualified under section 501(C)(3) of the Internal

Revenue Code of 1986 (26 U.S.C. § 501(c)(3) (relating

to exemption from tax on corporations, certain

trusts, etc.)) and that has obtained an exemption

number from the department as a charitable

organization under paragraph (6).

(38) The sale at retail or use of a subscription for a

magazine, including printed advertising materials circulated

with the periodical or publication, regardless of where or by

whom the printed advertising material was produced. As used

20250HB1649PN2003 - 97 -

in this paragraph, "magazine" means a periodical published at

regular intervals not exceeding three months, which is

circulated among the general public, containing matters of

general interest and reports of current events published for

the purpose of disseminating information of a public

character or devoted to literature, the sciences, art or some

special industry.

(39) The sale at retail or use of an interior office

building cleaning service, but only as it relates to the

costs of the supplied employee, including wages, salaries,

bonuses and commissions, employment benefits, expense

reimbursements and payroll and withholding taxes, to the

extent that these costs are specifically itemized or that

these costs in aggregate are stated in billings from the

seller or supplying entity.

(40) The sale at retail or use of candy or gum

regardless of the location from which the candy or gum is

sold.

(41) The sale at retail or use of a horse to be used

exclusively for commercial racing activities and the sale at

retail and use of feed, bedding, grooming supplies, riding

tack, farrier services, portable stalls and sulkies for a

horse used exclusively for commercial racing activities.

(42) The sale at retail or use of tangible personal

property or services used, transferred or consumed in

installing or repairing equipment or a device designed to

assist a person in ascending or descending a stairway when

all of the following conditions are met:

(i) The equipment or device is used by a person who,

by virtue of a physical disability, is unable to ascend

20250HB1649PN2003 - 98 -

or descend stairs without the aid of the equipment or

device.

(ii) The equipment or device is installed or used in

the person's place of residence.

(iii) A physician has certified the physical

disability of the person in whose residence the equipment

or device is installed or used.

(43) The sale at retail to or use by a construction

contractor of building machinery and equipment and services

that are transferred:

(i) under a construction contract for a charitable

organization, volunteer firefighters' organization,

volunteer firefighters' relief association, nonprofit

educational institution or religious organization for

religious purposes, if the building machinery and

equipment and services are not used in any unrelated

trade or business; or

(ii) to the United States or the Commonwealth or its

instrumentalities or political subdivisions.

(44) (Reserved).

(45) The sale at retail or use of a mold and related

mold equipment used directly and predominantly in the

manufacture of a product, notwithstanding whether the person

that holds title to the equipment manufactures a product.

(46) The sale or use of used prebuilt housing.

(47) The sale at retail to or use of food and

nonalcoholic beverages by an airline which will transfer the

food or nonalcoholic beverages to passengers in connection

with the rendering of the airline service.

(48) The sale at retail or use of tangible personal

20250HB1649PN2003 - 99 -

property or services which are directly used in farming,

dairying or agriculture when engaged in as a business

enterprise, whether or not the sale is made to the person

directly engaged in the business enterprise or to a person

contracting with the person directly engaged in the business

enterprise for the production of food.

(49) The sale at retail or use of separately stated fees

paid under 13 Pa.C.S. § 9525 (relating to fees).

(50) The sale at retail to or use by a construction

contractor, employed by a public school district under a

construction contract, of materials and building supplies

which, during construction or reconstruction, are made part

of a public school building utilized for instructional

classroom education within this Commonwealth, if the

construction or reconstruction:

(i) is necessitated by a disaster emergency, as

defined in 35 Pa.C.S. § 7102 (relating to definitions);

and

(ii) takes place during the period when there is a

declaration of disaster emergency under 35 Pa.C.S. §

7301(c) (relating to general authority of Governor).

(51) The sale at retail or use of investment metal

bullion and investment coins. As used in this paragraph:

(i) "Investment metal bullion" means an elementary

precious metal which has been put through a process of

smelting or refining, including gold, silver, platinum

and palladium, and which is in a state or condition that

its value depends upon its content and not its form. The

term shall not include a precious metal which has been

assembled, fabricated, manufactured or processed in one

20250HB1649PN2003 - 100 -

or more specific and customary industrial, professional,

aesthetic or artistic uses.

(ii) "Investment coins" means numismatic coins or

other forms of money and legal tender manufactured of

gold, silver, platinum, palladium or other metal and of

the United States or any foreign nation with a fair

market value greater than any nominal value of such

coins. The term shall not include commemorative

medallions or jewelry or works of art made of coins.

(52) The sale at retail or use of copies of an official

document sold by a government agency or a court. As used in

this paragraph:

(i) "Court" shall include any of the following:

(A) An appellate court as defined in 42 Pa.C.S.

§ 102 (relating to definitions).

(B) A court of common pleas as defined in 42

Pa.C.S. § 102.

§ 102.

(ii) "Government agency" shall mean an agency as

defined in section 102 of the act of February 14, 2008

(P.L.6, No.3), known as the Right-to-Know Law.

(iii) "Official document" shall mean a record as

defined in section 102 of the Right-to-Know Law. The term

shall include notes of court testimony, a deposition

transcript, driving record, accident report, birth and

death certificate, deed, divorce decree and other similar

documents.

(53) The sale at retail or use of repair or replacement

parts or software or software upgrades, including the

20250HB1649PN2003 - 101 -

installation of those parts, software or software upgrades,

exclusively for use in a helicopter and similar rotorcraft or

a flight simulator or in the overhauling or rebuilding of a

helicopter and similar rotorcraft or a flight simulator or

helicopter and similar rotorcraft or flight simulator

components.

(54) The sale at retail or use or lease of a helicopter

or similar rotorcraft or a flight simulator, as well as

training materials, operational documents and publications

relating to the use or operation of helicopters and similar

rotorcrafts and flight simulators.

(55) The sale at retail or use of aircraft parts,

services to aircraft and aircraft components. For purposes of

this paragraph, "aircraft" shall include a fixed-wing

aircraft, powered aircraft, tilt-rotor or tilt-wing aircraft,

glider or unmanned aircraft.

(56) The sale at retail or use of services related to

the set up, tear down or maintenance of tangible personal

property rented by an authority to exhibitors at a convention

center or a public auditorium, established under any of the

following:

(i) 64 Pa.C.S. Ch. 60 (relating to Pennsylvania

Convention Center Authority).

(ii) The act of July 28, 1953 (P.L.723, No.230),

known as the Second Class County Code.

(iii) 16 Pa.C.S. (relating to counties).

(57) The sale at retail or use of food and beverages by

a volunteer firemen's organization to raise funds for the

purposes of the volunteer firemen's organization.

(58) The sale at retail of building materials and

20250HB1649PN2003 - 102 -

supplies used for the construction or repair of an animal

housing facility, regardless if the sale is made to the

purchaser directly or pursuant to a construction contract.

(59) The sale at retail or use by a financial

institution of canned computer software directly utilized in

conducting the business of banking. For the purposes of this

paragraph, the following words and phrases shall have the

following meanings:

(i) "Directly utilized in conducting the business of

banking" includes the purchase of canned computer

software by a financial institution to be used in

transactions with customers and service providers. The

term does not include the purchase of canned computer

software by entities, other than a financial institution,

such as holding companies and subsidiaries of a financial

institution.

(ii) "Financial institution" means an institution

doing business in this Commonwealth subject to the tax

imposed by Article VII or XV of the Tax Reform Code of

1971.

(60) The sale at retail or use of a multipurpose

agricultural vehicle operated for the benefit of or pursuant

to the operation of a farm owned or operated by the owner of

the vehicle or a business whose enterprises and activities

are considered part of farming. For the purposes of this

paragraph, the following words and phrases shall have the

following meanings:

(i) "Multipurpose agricultural vehicle" means a

motor vehicle exempt from registration in accordance with

75 Pa.C.S. § 1302(17) (relating to vehicles exempt from

20250HB1649PN2003 - 103 -

registration) which is 66 inches or less in width and

2,000 pounds or less in dry weight and which is used

exclusively for agricultural operations and only

incidentally operated or moved upon the highways.

(ii) "Use of a multipurpose agricultural vehicle in

farming" means repairing and maintaining buildings,

including houses, garages, barns, stables, greenhouses,

mushroom houses and storehouses, fences and stanchions,

permanently affixed to real estate, as well as

transporting farming personnel, collecting, conveying or

transporting property to be used in farming and

transporting or conveying the farm product after the

final farming operation, which includes, but does not

extend beyond, the operation of packaging for the

ultimate consumer and storage.

(61) The sale at retail or use of tangible personal

property manufactured for the purpose of initiating,

supporting or sustaining breast feeding.

(62) The sale at retail or use of services related to

the cleaning or maintenance of a storage trap utilized by a

food service or restaurant establishment to collect grease

waste.

§ 1322. Alternate imposition of tax and credits.

(a) Motor vehicle, trailer or semitrailer.--If a person

actively and principally engaged in the business of selling new

or used motor vehicles, trailers or semitrailers, and registered

with the department in the "dealer's class," acquires a motor

vehicle, trailer or semitrailer for the purpose of resale, and

prior to the resale, uses the motor vehicle, trailer or

semitrailer for a taxable use under this subpart, the person may

20250HB1649PN2003 - 104 -

elect to pay a tax equal to 6% of the fair rental value of the

motor vehicle, trailer or semitrailer during the use. This

subsection shall not apply to the use of a vehicle as a wrecker,

parts truck, delivery truck or courtesy car.

(b) Aircraft.--A commercial aircraft operator who acquires

an aircraft for the purpose of resale, or lease, or is entitled

to claim another valid exemption at the time of purchase, and

subsequent to the purchase, periodically uses the aircraft for a

taxable use under this subpart, may elect to pay a tax equal to

6% of the fair rental value of the aircraft during the use.

§ 1323. Credit against tax.

A credit against the tax imposed by Subchapter A (relating to

imposition of tax) shall be granted with respect to tangible

personal property or services purchased for use outside this

Commonwealth equal to the tax paid to another state by reason of

the imposition by the other state of a tax similar to the tax

imposed by this subpart, except that no credit shall be granted

unless the other state grants substantially similar tax relief

by reason of the payment of tax under this subpart or under the

former act of March 6, 1956 (P.L.1228, No.381), known as the Tax

Act of 1963 for Education.

SUBCHAPTER D

LICENSES

Sec.

1331. Definitions.

1332. Application.

1333. Issuance and conditions.

1334. Administrative action.

1335. Penalties.

1336. Liability.

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§ 1331. Definitions.

The following words and phrases when used in this subchapter

shall, in addition to the meaning given to them in section 1102

(relating to definitions), have the meanings given to them in

this section unless the context clearly indicates otherwise:

"Maintaining a place of business in this Commonwealth."

Being an operator as defined in section 1341 (relating to

definitions).

"Sale." The providing of occupancy to an occupant by an

operator, as those terms are defined in section 1341.

"Services." Occupancy as defined in section 1341.

"Tangible personal property." Occupancy as defined in

section 1341.

"Use." Occupancy as defined in section 1341.

§ 1332. Application.

A person maintaining a place of business in this

Commonwealth, with the exception of a marketplace seller who

makes no sales outside a forum for which a marketplace seller is

required to collect sales tax on the seller's behalf, and a

shared vehicle owner who makes no vehicle available for sharing

outside a forum for which a peer-to-peer car-sharing program

marketplace facilitator is required to collect sales tax on

behalf of the shared vehicle owner selling or leasing services

or tangible personal property, the sale or use of which is

subject to tax, and who has not yet obtained a license from the

department, shall, prior to the beginning of business, make

application to the department, on a form prescribed by the

department, for a license. If the person maintains more than one

place of business in this Commonwealth, the license shall be

issued for the principal place of business in this Commonwealth.

20250HB1649PN2003 - 106 -

§ 1333. Issuance and conditions.

(a) Issuance.--After the receipt of an application, the

department shall issue the license applied for under section

1332 (relating to application) if the applicant has filed all

required State tax reports and paid any State taxes not subject

to a timely perfected administrative or judicial appeal or

subject to a duly authorized deferred payment plan.

(b) Nonassignability.--A license under this subchapter shall

be nonassignable.

required to file for renewal of the license on or before January

31, 1992. Licenses issued through April 30, 1992, shall be based

on a staggered renewal system established by the department. Any

license issued after April 30, 1992, shall be valid for a period

of five years.

§ 1334. Administrative action.

(a) Authorization.--If an applicant for a license or a

person holding a license has not filed all required State tax

reports and paid any State taxes not subject to a timely

perfected administrative or judicial appeal or subject to a duly

authorized deferred payment plan, the department may refuse to

issue, may suspend or may revoke the license.

(b) Notification.--

(1) The department shall notify the applicant or

licensee of any refusal, suspension or revocation.

(2) The notice shall contain a statement that the

refusal, suspension or revocation may be made public.

(3) The notice shall be made by first class mail.

(1) An applicant or licensee aggrieved by the

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determination of the department may file an appeal pursuant

to the provisions for administrative appeals in this subpart,

except that the appeal must be filed within 30 days of the

date of the notice.

(2) In the case of a suspension or revocation which is

appealed, the license shall remain valid pending a final

outcome of the appeals process.

(3) Notwithstanding sections 1596 (relating to

unauthorized disclosure) and 2817(f) (relating to crimes) and

sections 408(b), 603, 702, 802, 904 and 1102 of the Tax

Reform Code of 1971 or any other provision of law to the

contrary, if no appeal is taken or if an appeal is taken and

denied at the conclusion of the appeal process, the

department may disclose, by publication or otherwise, the

identity of a person and the fact that the person's license

has been refused, suspended or revoked under this section.

Disclosure may include the basis for refusal, suspension or

revocation.

§ 1335. Penalties.

(a) Fine and imprisonment.--A person that maintains a place

of business in this Commonwealth for the purpose of selling or

leasing services or tangible personal property, the sale or use

of which is subject to tax, without having a valid license at

the time of the sale or lease, shall be guilty of a summary

offense and, upon conviction, be sentenced to pay a fine of not

less than $300 nor more than $1,500 and, in default of the fine,

to undergo imprisonment of not less than five days nor more than

30 days.

(b) Nature of penalties.--The penalties imposed by this

section shall be in addition to any other penalties imposed by

20250HB1649PN2003 - 108 -

this subpart.

offering for sale or lease of any service or tangible personal

property, the sale or use of which is subject to tax, during any

calendar day shall constitute a separate violation.

(d) Enforcement.--The secretary may designate employees of

the department to enforce the provisions of this section. The

employees shall exhibit proof of and be within the scope of the

designation when instituting proceedings as provided by the

Pennsylvania Rules of Criminal Procedure.

§ 1336. Liability.

Failure of a person to obtain a license shall not relieve

that person of liability to pay the tax imposed by this subpart.

SUBCHAPTER E

HOTEL OCCUPANCY TAX

Sec.

1341. Definitions.

1342. Imposition of tax.

1343. Collection of tax.

1344. Seasonal tax returns.

1345. Tourism Promotion Fund.

§ 1341. Definitions.

The following words and phrases when used in this subchapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Accommodation fee." The amount by which the rent exceeds the

discount room charge, if any.

"Booking agent." A person or entity which facilitates or

collects payment for hotel accommodations on behalf of or for an

operator. The term "booking agent" shall not include a person

20250HB1649PN2003 - 109 -

who merely publishes advertisements for accommodations.

"Discount room charge." The amount charged by an operator to

a booking agent in connection with the sale of an accommodation

by the booking agent .

"Hotel." As follows:

(1) A building or buildings in which the public may, for

a consideration, obtain sleeping accommodations.

(2) The term shall not include a charitable, educational

or religious institution summer camp for children, hospital

or nursing home.

"Occupancy." The use or possession or the right to the use

or possession by a person, other than a permanent resident, of a

room or rooms in a hotel for any purpose or the right to the use

or possession of the furnishings or to the services and

accommodations accompanying the use and possession of the room

or rooms.

"Occupant." As follows:

(1) A person who, for a consideration, uses or possesses

or has a right to use or possess a room or rooms in a hotel

under a lease, concession, permit, right of access, license

or agreement.

(2) The term shall not include a permanent resident.

"Operator." A person operating a hotel or acting as a

booking agent.

"Permanent resident." An occupant who has occupied or has

the right to occupancy of a room or rooms in a hotel for at

least 30 consecutive days.

"Rent." As follows:

(1) Any of the following:

(i) The consideration received for occupancy valued

20250HB1649PN2003 - 110 -

in money, whether received in money or otherwise,

including all receipts, cash, credits and property or

services of any kind or nature.

(ii) Accommodation fees.

(iii) An amount for which the occupant is liable for

the occupancy without any deduction from the amount,

including an amount charged by a booking agent.

(2) The term shall not include a gratuity.

§ 1342. Imposition of tax.

(a) General rule.--An excise tax of 6% of the rent is

imposed upon every occupancy of a room or rooms in a hotel in

this Commonwealth.

(b) Booking agent.--If a booking agent acting for an

operator collects payment for rent, the booking agent must

collect and remit the following:

(1) The tax imposed under this section.

(2) Any additional or optional hotel tax imposed under:

(i) The act of June 5, 1991 (P.L.9, No.6), known as

the Pennsylvania Intergovernmental Cooperation Authority

Act for Cities of the First Class.

(ii) The act of December 21, 1998 (P.L.1307,

No.174), known as the Community and Economic Improvement

Act.

(iii) 64 Pa.C.S. Ch. 60 (relating to Pennsylvania

Convention Center Authority);

(iv) 16 Pa.C.S. Chs. 149 (relating to fiscal

affairs) and 161 (relating to grounds and buildings).

(v) The act of July 28, 1953 (P.L.723, No.230),

known as the Second Class County Code.

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any provision of law to the contrary, the following shall apply:

(1) The collected and remitted tax imposed under

subsection (b)(1) shall be deposited into the Tourism

Promotion Fund established under section 1345 (relating to

Tourism Promotion Fund).

(2) The collected and remitted tax imposed under

subsection (b)(2) shall be deposited in accordance with a

county ordinance.

(d) Accommodation fee.--An operator shall not be liable for

tax owed regarding an accommodation fee.

(e) Disclosure.--A booking agent shall not be required to

separately disclose to an occupant the amount of the tax imposed

that relates to a discount room charge versus an accommodation

fee.

§ 1343. Collection of tax.

The tax under this subchapter shall be collected by the

operator from the occupant and paid over to the Commonwealth as

provided in this subpart.

§ 1344. Seasonal tax returns.

Notwithstanding any other provisions in this subpart, the

department may, by regulation, waive the requirement for the

filing of quarterly returns in the case of an operator whose

hotel is operated only during certain seasons of the year, and

may provide for the filing of returns by persons at times other

than those provided by Subchapter C of Chapter 15 (relating to

payment of tax).

§ 1345. Tourism Promotion Fund.

(a) Establishment.--A restricted revenue account is

established within the Treasury Department to be known as the

Tourism Promotion Fund.

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(b) Taxes and appropriation.--The tax collected by a booking

agent on accommodation fees under section 1342 (relating to

imposition of tax) shall be deposited into the Tourism Promotion

Fund and disbursed upon appropriation for the purpose of

promoting tourism in this Commonwealth.

Economic Development shall promulgate guidelines, rules and

regulations as necessary to achieve the purpose of promoting

tourism in this Commonwealth.

(d) Exceptions.--Money from the fund may not be used for the

promotion or marketing operations of a tourism entity or for

special events or grants until 30 days after the publication of

the guidelines, rules and regulations under subsection (c) in

the Pennsylvania Bulletin.

(e) Amount of funds.--

(1) No more than 50% of the funds available for

disbursement under subsection (b) may be distributed for the

purposes of promotion or marketing operations of a tourism

entity or for special events or grants.

(2) Funding for the promotion or marketing operations of

a tourism entity, special events or grants shall require a

50% cash or in-kind match.

(3) A single recipient of funding under paragraph (2)

may not be awarded more than 15% of the total funds available

for disbursement under subsection (b). This paragraph shall

not apply to contracts entered into by the department for

Statewide tourism promotion or marketing.

(f) Restrictions.--Funds available for disbursement under

subsection (b) may not be used for capital projects or for the

design, construction, rehabilitation, repair, installation or

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purchase of any building, structure or sign in this

Commonwealth.

(g) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Promoting tourism." Activities and expenditures designed to

increase tourism, including:

(1) Advertising, publicizing or otherwise distributing

information for the purpose of attracting and welcoming

tourists.

(2) Developing strategies to expand tourism.

(3) Funding the promotion or marketing operations of a

tourism entity .

(4) Funding marketing and operations of special events

and festivals designed to attract tourists.

"Tourism entity." A "tourism promotion agency" as defined in

section 2 of the act of July 4, 2008 (P.L.621, No.50), known as

the Tourism Promotion Act, destination marketing organization or

regional attractions marketing agency.

SUBCHAPTER F

REMOTE SELLERS

Sec.

1351. Definitions.

1352. Election.

1353. Notice requirements.

1354. Reports to purchasers and marketplace sellers.

1355. Reports to department.

1356. Liability and penalties.

1357. Application.

1358. Transfer to county sales and use tax accounts.

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§ 1351. Definitions.

The following words and phrases when used in this subchapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Affiliated person." A person that, with respect to another

person:

(1) has a direct or indirect ownership interest of more

than 5% in the other person; or

(2) is related to the other person because a third

person, or group of third persons who are affiliated with

each other as provided in this definition, holds a direct or

indirect ownership interest of more than 5% in the related

person.

"Forum." A place where sales at retail occur, whether

physical or electronic. The term includes a store, booth,

publicly accessible Internet website, catalog or similar place.

"Marketplace facilitator." As follows:

(1) A person that facilitates a sale at retail of

tangible personal property. For purposes of this definition,

a person facilitates a sale at retail if the person or an

affiliated person:

(i) lists or advertises tangible personal property

for sale at retail in any forum; and

(ii) directly or indirectly through agreements or

arrangements with third parties collects the payment from

the purchaser and transmits the payment to the person

selling the property.

(2) The term shall include a person that may also be a

vendor.

"Marketplace seller." A person that has an agreement with a

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marketplace facilitator pursuant to which the marketplace

facilitator facilitates sales for the person.

"Notice and reporting requirements." The notice requirements

under section 1353 (relating to notice requirements) and the

reporting requirements under sections 1354 (relating to reports

to purchasers and marketplace sellers) and 1355 (relating to

reports to department).

"Referral." The transfer by a referrer of a potential

purchaser to a person that advertises or lists products for sale

on the referrer's platform.

"Referrer." As follows:

(1) A person, other than a person engaging in the

business of printing or publishing a newspaper, that,

pursuant to an agreement or arrangement with a marketplace

seller or remote seller, does all of the following:

(i) Agrees to list or advertise for sale at retail

one or more products of the marketplace seller or remote

seller in a physical or electronic medium.

(ii) Receives consideration from the marketplace

seller or remote seller from the sale offered in the

listing or advertisement.

(iii) Transfers by telecommunications, Internet link

or other means, a purchaser to a marketplace seller,

remote seller or affiliated person to complete a sale.

(iv) Does not collect a receipt from the purchaser

for the sale.

(2) The term shall include a person that may also be a

vendor.

(3) The term shall not include a person that:

(i) provides Internet advertising services; and

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(ii) does not provide the marketplace seller's or

remote seller's shipping terms or advertise whether a

marketplace seller or remote seller collects a sales or

use tax.

"Remote seller." A person, other than a marketplace

facilitator, marketplace seller or referrer, that does not

maintain a place of business in this Commonwealth that, through

a forum, sells tangible personal property at retail, the sale or

use of which is subject to the tax imposed by this chapter. The

term does not include an employee who in the ordinary scope of

employment renders services to the employee's employer in

exchange for wages and salaries.

§ 1352. Election.

(a) Duty.--Subject to subsections (c) and (d), on or before

March 1, 2018, and on or before June 1 of each calendar year

thereafter, beginning June 1, 2019, a remote seller, marketplace

facilitator or referrer that had aggregate sales at retail of

tangible personal property subject to tax under this subpart

within this Commonwealth or delivered to locations within this

Commonwealth worth at least $10,000 during the immediately

preceding 12-calendar-month period shall file an election with

the department to collect and remit the tax imposed under this

subchapter or to comply with the notice and reporting

requirements. The election shall be made on a form and in a

manner prescribed by the department and, except as provided

under subsection (e), shall apply to the next succeeding fiscal

year.

(b) License.--A remote seller, marketplace facilitator or

referrer that makes an election under subsection (a) to collect

and remit the tax imposed under this subchapter shall obtain a

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license under Subchapter D (relating to licenses).

requirement by a marketplace facilitator to make an election

under subsection (a) shall only apply to the following:

(1) Sales at retail through the marketplace

facilitator's forum made by or on behalf of a marketplace

seller that does not maintain a place of business in this

Commonwealth.

(2) S ales at retail made by a marketplace facilitator on

its own behalf if the marketplace facilitator does not

maintain a place of business in this Commonwealth.

(d) Applicability for referrer.--

(1) The requirement by a referrer to make an election

under subsection (a) shall only apply to sales at retail:

(i) directly resulting from a referral of a

purchaser to a marketplace seller that does not maintain

a place of business in this Commonwealth;

(ii) d irectly resulting from a referral of a

purchaser to a remote seller; and

(iii) of the referrer's own products if the referrer

does not maintain a place of business in this

Commonwealth.

(2) A referrer may make an election under subsection (a)

for the sales described under paragraph (1)(i) and (ii) that

is different from the election made for the sales described

under paragraph (1)(iii).

(e) Effective period and change of election.--An election

made on or before March 1, 2018, shall be in effect for the

balance of the 2017-2018 fiscal year and for the 2018-2019

fiscal year. A remote seller, marketplace facilitator or

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referrer may change an election to comply with the notice and

reporting requirements to an election to collect and remit the

tax imposed under this subchapter at any time during a fiscal

year by filing a new election with the department and obtaining

a license under Subchapter D. The new election shall be

effective 30 days after the filing and shall be effective for

the balance of the fiscal year in which the new election was

filed and for the next succeeding fiscal year.

(f) Deemed compliance.--A remote seller, marketplace

facilitator or referrer who does not submit an election under

subsection (a) or a new election under subsection (e) shall be

deemed to have elected to comply with the notice and reporting

requirements.

(g) Additional requirements.--In addition to records that

may be required to be maintained under other applicable

provisions of this subpart by a remote seller, a marketplace

facilitator or referrer, remote seller, marketplace facilitator

or referrer subject to this subpart shall also be subject to

sections 1592 (relating to keeping of records) and 1594

(relating to examinations).

§ 1353. Notice requirements.

(a) Compliance.--A remote seller, marketplace facilitator or

referrer required to make an election under section 1352

(relating to election) that does not elect to collect and remit

the tax imposed by this subchapter shall comply with the

applicable notice requirements of this section.

(b) Notice by remote seller or marketplace facilitator.--

(1) A remote seller or marketplace facilitator subject

to the requirements of this section shall:

(i) Post a conspicuous notice on its forum that

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informs purchasers intending to purchase tangible

personal property for delivery to a location within this

Commonwealth that includes all of the following:

(A) S ales or use tax may be due in connection

with the purchase and delivery of the tangible

personal property.

(B) The Commonwealth requires the purchaser to

file a return if use tax is due in connection with

the purchase and delivery.

(ii) Provide a written notice to each purchaser at

the time of each sale at retail that includes all of the

following:

(A) A statement that sales tax is not being

collected in connection with the purchase.

(B) A statement that the purchaser may be

required to remit use tax directly to the department.

information from the department regarding whether and

how to remit use tax to the department.

(2) The notice required by paragraph (1)(ii) must be

prominently displayed on all invoices and order forms and on

each sales receipt or similar document, whether in paper or

electronic form, provided to the purchaser. No statement that

sales or use tax is not imposed on a transaction may be made

by a remote seller or marketplace facilitator unless the

transaction is exempt from sales and use tax under this

subpart or other applicable Commonwealth law.

(1) A referrer subject to the requirements of this

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section shall post a conspicuous notice on its platform that

informs purchasers intending to purchase tangible personal

property for delivery to a location within this Commonwealth

that includes all of the following:

(i) Sales or use tax may be due in connection with

the purchase and delivery.

(ii) T he person to which the purchaser is being

referred may or may not collect and remit sales tax to

the department in connection with the transaction.

(iii) The Commonwealth requires the purchaser to

file a return if use tax is due in connection with the

purchase and delivery and not collected by the person.

(iv) The notice is required by this section.

(v) Instructions for obtaining additional

information from the department regarding whether and how

to remit sales or use tax to the department.

(vi) If the person to whom the purchaser is being

referred does not collect sales tax on a subsequent

purchase by the purchaser, the person may be required to

provide information to the purchaser and the department

about the purchaser's potential sales or use tax

liability.

(2) The notice required under paragraph (1) must be

prominently displayed and may include pop-up boxes or

notification by other means that appears when the referrer

transfers a purchaser to another person to complete the sale.

§ 1354. Reports to purchasers and marketplace sellers.

(a) Contents.--A remote seller or marketplace facilitator

required to make an election under section 1352(a) (relating to

election) that does not elect to collect and remit the tax

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imposed by this subchapter shall, no later than January 31 of

each year, provide a written report to each purchaser required

to receive the notice under section 1353(b)(1)(ii) (relating to

notice requirements) during the immediately preceding calendar

year that includes all of the following:

(1) A statement that the remote seller or marketplace

facilitator did not collect sales tax in connection with the

purchaser's transactions with the remote seller or

marketplace facilitator and that the purchaser may be

required to remit use tax to the department.

(2) A list, by date, indicating the type and purchase

price of each product purchased or leased by the purchaser

from the remote seller or marketplace facilitator and

delivered to a location within this Commonwealth.

(3) Instructions for obtaining additional information

from the department regarding whether and how to remit use

tax to the department.

(4) A statement that the remote seller or marketplace

facilitator is required to submit a report to the department

under section 1355 (relating to reports to department) that

includes the name of the purchaser and the aggregate dollar

amount of the purchaser's purchases from the remote seller or

marketplace facilitator.

(5) Additional information as the department may

reasonably require.

(b) Form.--The department shall prescribe the form of the

report required under subsection (a) and shall make the form

available on its publicly accessible Internet website.

shall be mailed by first class mail in an envelope prominently

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marked with words indicating that important tax information is

enclosed to the purchaser's billing address, if known, or, if

unknown, to the purchaser's shipping address. If the purchaser's

billing and shipping addresses are unknown, the report shall be

sent electronically to the purchaser's last known e-mail address

with a subject heading indicating that important tax information

is being provided.

(d) Notice.--A referrer required to make an election under

section 1352(a) that does not elect to collect and remit the tax

imposed by this subchapter shall, no later than January 31 of

each year, provide a written notice to each remote seller to

whom the referrer transferred a potential purchaser located in

this Commonwealth during the immediately preceding calendar year

that includes all of the following:

(1) A statement that a sales or use tax may be imposed

by the Commonwealth on the transaction.

(2) A statement that the remote seller may be required

to make the election required by section 1352(a).

(3) Instructions for obtaining additional information

regarding sales and use tax from the department.

§ 1355. Reports to department.

(a) Contents.--A remote seller or marketplace facilitator

required to make an election under section 1352(a) (relating to

election) that does not elect to collect and remit the tax

imposed by this subchapter shall, no later than January 31 of

each year, submit a report to the department. The report shall

include, with respect to each purchaser required to receive the

notice under section 1353(b)(1)(ii) (relating to notice

requirements) during the immediately preceding calendar year,

the following:

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(1) The purchaser's name.

(2) The purchaser's billing address and, if different,

the purchaser's last known mailing address.

(3) The address within this Commonwealth to which

products were delivered to the purchaser.

(4) The aggregate dollar amount of the purchaser's

purchases from the remote seller or marketplace facilitator.

(5) The name and address of the remote seller,

marketplace facilitator or marketplace seller that made the

sales to the purchaser.

(b) Report and contents.--A referrer required to make an

election under section 1352(a) that does not elect to collect

and remit the tax imposed by this subchapter shall, no later

than January 31 of each year, submit a report to the department.

The report shall include a list of persons who received the

notice required under section 1354(d) (relating to reports to

purchasers and marketplace sellers).

the forms of the reports required under this section and shall

make them available on its publicly accessible Internet website.

The reports shall be submitted electronically in a manner as the

department shall require.

(d) Submission and statement.--A report required under this

section shall be submitted by an officer of the remote seller,

marketplace facilitator or referrer and shall include a

statement, made under penalty of perjury, by the officer that

the remote seller, marketplace facilitator or referrer made

reasonable efforts to comply with the notice and reporting

requirements of this subpart.

§ 1356. Liability and penalties.

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(a) Assessment.--The department shall assess a penalty in

the amount of $20,000 or 20% of total sales in Pennsylvania

during the previous 12 months, whichever is less, against a

remote seller, marketplace facilitator or referrer that makes an

election under section 1352(a) (relating to election) to comply

with the notice and reporting requirements, or is deemed to have

made such election under section 1352(f), and fails to comply

with the requirements under section 1354 (relating to reports to

purchasers and marketplace sellers) or 1355 (relating to reports

to department). The penalty shall be assessed separately for

each violation but may only be assessed once in a calendar year.

(b) Subject to penalties.--A remote seller, marketplace

facilitator or referrer that makes an election under section

1352(a) to collect and remit the tax imposed under this

subchapter shall be subject to all of the provisions of this

part with respect to the collection and remittance of the tax

and shall be subject to all of the penalties, interest and

additions for failing to comply with the provisions of this

subpart except as provided in this section.

penalties or addition imposed under subsection (b) due to

hardship or for good cause shown for a period which ends as

follows:

(1) Except as otherwise provided under paragraph (2),

February 1, 2027.

(2) For tangible personal property described under

paragraph (2) of the definition of "tangible personal

property" under section 1102 (relating to definitions),

February 1, 2028.

(d) Relief from liability.--A marketplace facilitator or

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referrer is relieved of liability under subsection (b) if the

marketplace facilitator or referrer can show to the satisfaction

of the department that the failure to collect the correct amount

of tax was due to incorrect information given to the marketplace

facilitator or referrer by a marketplace seller or remote

seller.

(e) Class action.--A class action may not be brought against

a marketplace facilitator or referrer on behalf of purchasers

arising from or in any way related to an overpayment of sales or

use tax collected by the marketplace facilitator or referrer,

regardless of whether the action is characterized as a tax

refund claim. Nothing in this subsection shall affect a

purchaser's right to seek a refund from the department under

other provisions of this subpart.

§ 1357. Application.

Nothing in this section shall affect the obligations of a

vendor to register with the department and to collect and remit

sales tax or use tax.

§ 1358. Transfer to county sales and use tax accounts.

Beginning October 1, 2029, 2% of the tax imposed under

Subchapter A (relating to imposition of tax) that is collected

and remitted by a remote seller, a marketplace facilitator or a

referrer shall be transferred to the School District Property

Tax Elimination Fund and credited under 53 Pa.C.S. § 90A52

(relating to payments to counties) to the respective county

sales and use tax accounts in the same proportion that each

county's receipts under section 90A22 (relating to imposition)

bears to the total receipts under section 90A22 for all

counties. The amount transferred shall include interest and

penalties, less any collection costs allowed and any refunds and

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credits paid.

CHAPTER 15

PROCEDURE AND ADMINISTRATION

Subchapter

A. Preliminary Provisions

B. Returns

C. Payment of Tax

D. Assessment and Collection of Tax

E. Refunds and Credits

F. Limitations

G. Interest, Additions, Penalties and Crimes

H. Enforcement and Examinations

I. Miscellaneous Provisions

SUBCHAPTER A

PRELIMINARY PROVISIONS

Sec.

1501. Definitions.

§ 1501. Definitions.

The following words and phrases when used in this chapter

shall, in addition to the meaning given to them in section 1102

(relating to definitions), have the meanings given to them in

this section unless the context clearly indicates otherwise:

"Maintaining a place of business in this Commonwealth."

Being an operator as defined in section 1341 (relating to

definitions).

"Purchase price." Rent as defined in section 1341.

"Purchaser." An occupant as defined in section 1341.

"Sale." The providing of occupancy to an occupant by an

operator, as those terms are defined in section 1341.

"Services." Occupancy as defined in section 1341.

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"Tangible personal property." Occupancy as defined in

section 1341.

"Use." Occupancy as defined in section 1341.

"Vendor" An operator as defined in section 1341.

SUBCHAPTER B

RETURNS

Sec.

1511. Persons required to make returns.

1512. Form of returns.

1513. Time for filing returns.

1514. Extension of time for filing returns.

1515. Place for filing returns.

1516. Timely mailing treated as timely filing and payment.

§ 1511. Persons required to make returns.

Every person required to pay tax to the department or collect

and remit tax to the department, but not including a marketplace

seller who solely makes sales through a marketplace facilitator

that is required to collect sales tax on the seller's behalf and

receives a certification from the marketplace facilitator that

the marketplace facilitator will collect, report and remit the

proper sales tax, shall file returns with respect to the tax.

§ 1512. Form of returns.

The returns required by section 1511 (relating to persons

required to make returns) shall be on forms prescribed by the

department and shall show the information with respect to the

taxes imposed by this subpart as the department may reasonably

require.

§ 1513. Time for filing returns.

(a) Quarterly and monthly returns.--

(1) For the calendar year 1971, and in each year

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thereafter, a return shall be filed quarterly by every

licensee on or before the 20th day of April, July, October

and January for the three months ending the last day of

March, June, September and December.

(2) For the calendar year 1971, and in each year

thereafter, a return shall be filed monthly with respect to

each month by every licensee whose actual tax liability for

the third calendar quarter of the preceding year equals or

exceeds $600 and is less than $25,000. The return shall be

filed on or before the 20th day of the next succeeding month

with respect to which the return is made. A licensee required

to file monthly returns under this section shall be relieved

from filing quarterly returns.

(3) With respect to every licensee whose actual tax

liability for the third calendar quarter of the preceding

year equals or exceeds $25,000 and is less than $100,000, the

licensee shall, on or before the 20th day of each month, file

a single return consisting of all of the following:

(i) Either of the following:

(A) An amount equal to 50% of the licensee's

actual tax liability for the same month in the

preceding calendar year if the licensee was a monthly

filer or, if the licensee was a quarterly or semi-

annual filer, 50% of the licensee's average actual

tax liability for that tax period in the preceding

calendar year. The following shall apply:

(I) The average actual tax liability shall

be the actual tax liability for the tax period

divided by the number of months in that tax

period.

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(II) For licensees that were not in business

during the same month in the preceding calendar

year or were in business for only a portion of

that month, the amount shall be 50% of the

average actual tax liability for each tax period

the licensee has been in business.

(III) If the licensee is filing a tax

liability for the first time with no preceding

tax periods, the amount shall be zero.

(B) An amount equal to or greater than 50% of

the licensee's actual tax liability for the same

month.

(ii) An amount equal to the taxes due for the

preceding month, less any amounts paid in the preceding

month as required by subparagraph (i).

(4) With respect to each month by every licensee whose

actual tax liability for the third calendar quarter of the

preceding year equals or exceeds $100,000, the licensee

shall, on or before the 20th day of each month, file a single

return consisting of the amounts under paragraph (3)(i)(A)

and (ii).

(5) The amount due under paragraph (3)(i) or (4) shall

be due the same day as the remainder of the preceding month's

tax.

(6) The department shall determine whether the amounts

reported under paragraph (3) or (4) shall be remitted as one

combined payment or as two separate payments.

(7) The department may require the filing of the returns

and the payments for these types of filers by electronic

means approved by the department.

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(8) A licensee filing returns under paragraph (3) or (4)

shall be relieved of filing quarterly returns.

(9) If a licensee required to remit payments under

paragraph (3) or (4) fails to make a timely payment or makes

a payment which is less than the required amount, the

department may, in addition to any applicable penalties,

impose an additional penalty equal to 5% of the amount due

under paragraph (3) or (4) which was not timely paid. The

penalty under this paragraph shall be determined when the tax

return is filed for the tax period.

(b) Annual returns.--

(1) For the calendar year 1971, and for each year

thereafter, no annual return shall be filed, except as may be

required by rules and regulations of the department

promulgated and published at least 60 days prior to the end

of the year with respect to which the returns are made.

(2) If annual returns are required, licensees shall not

be required to file returns prior to the 20th day of the year

succeeding the year with respect to which the returns are

made.

to pay to the department a tax under this subpart shall file a

return on or before the 20th day of the month succeeding the

month in which the person becomes liable for the tax.

(d) Small taxpayers.--The department, by regulation, may

waive the requirement for the filing of a quarterly return in

the case of a licensee whose individual tax collections do not

exceed $75 per calendar quarter and may provide for reporting on

a less frequent basis in such cases.

§ 1514. Extension of time for filing returns.

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(a) General rule.--Except as provided under subsection (b),

the department may, on written application and for good cause

shown, grant a reasonable extension of time for filing a return

required under this subpart.

(b) Exception.--The time for making a return shall not be

extended for more than three months.

§ 1515. Place for filing returns.

Returns shall be filed with the department at its main office

or at a branch office which the department may designate for

filing returns.

§ 1516. Timely mailing treated as timely filing and payment.

(a) Postmark.--Notwithstanding the provisions of any State

tax law, whenever a report or payment of all or any portion of a

State tax is required by law to be received by the department or

other agency of the Commonwealth on or before a day certain, the

taxpayer shall be deemed to have complied with the law if the

letter transmitting the report or payment of the tax which has

been received by the department is postmarked by the United

States Postal Service on or prior to the final day on which the

payment is to be received.

(b) Evidence.--For the purposes of this subpart,

presentation of a receipt indicating that the report or payment

was mailed by registered or certified mail on or before the due

date shall be evidence of timely filing and payment.

SUBCHAPTER C

PAYMENT OF TAX

Sec.

1521. Payment.

1522. Time of payment.

1523. Other times for payment.

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1524. Place for payment.

1525. Tax held in trust for Commonwealth.

1526. Discount.

§ 1521. Payment.

When a return of tax is required under this subpart, the

person required to make the return shall pay the tax to the

department.

§ 1522. Time of payment.

(a) Monthly and quarterly payments.--The tax imposed by this

subpart and incurred or collected by a licensee shall be due and

payable by the licensee on the day the return is required to be

filed under the provisions of section 1513 (relating to time for

filing returns) and payment must accompany the return.

(b) Annual payments.--If the amount of tax due for the

preceding year as shown by the annual return of a taxpayer is

greater than the amount already paid by the taxpayer in

connection with the taxpayer's monthly or quarterly returns, the

taxpayer shall send with the annual return a remittance for the

unpaid amount of tax for the year.

to pay tax under this subpart shall remit the tax at the time of

filing the return required by this subpart.

§ 1523. Other times for payment.

If the department authorizes a taxpayer to file a return at

other times than those specified under section 1513 (relating to

time for filing returns), the tax due shall be paid at the time

the return is filed.

§ 1524. Place for payment.

The tax imposed by this subpart shall be paid to the

department at the place fixed for filing the return.

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§ 1525. Tax held in trust for Commonwealth.

(a) Establishment, enforceability and good faith.--All taxes

collected by a person from purchasers in accordance with this

subpart and all taxes collected by a person from purchasers

under color of this subpart, including all taxes paid by a

person who advertises or holds out or states, directly or

indirectly, that the person will pay the tax for the purchaser,

which have not been properly refunded by the person to the

purchaser shall constitute a trust fund for the Commonwealth,

and the trust shall be enforceable against the person, the

person's representatives and any person, other than a purchaser

to whom a refund has been made properly, receiving any part of

the fund without consideration or knowing that the taxpayer is

committing a breach of trust, provided that a person receiving

payment of a lawful obligation of the taxpayer from the fund

shall be presumed to have received the payment in good faith and

without any knowledge of the breach of trust.

(b) Petition and appeal.--A person, other than a taxpayer,

against whom the department makes a claim under this section

shall have the same right to petition and appeal as is given

taxpayers by any provisions of this chapter.

§ 1526. Discount.

If a return is filed by a licensee and the tax shown to be

due on the return less any discount is paid all within the time

prescribed, the licensee shall be entitled, as compensation for

the expense of collecting and remitting the tax and as a

consideration of the prompt payment of the tax, to credit and

shall apply against the tax payable by the licensee a discount

of the lesser of:

(1) 1% of the amount of the tax collected; or

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(2) as follows:

(i) $25 per return for a monthly filer;

(ii) $75 per return for a quarterly filer; or

(iii) $150 per return for a semiannual filer.

SUBCHAPTER D

ASSESSMENT AND COLLECTION OF TAX

Sec.

1531. Assessment.

1532. Mode and time of assessment.

1533. Reassessment.

1534. Assessment to recover erroneous refunds.

1535. Burden of proof.

1536. Collection of tax.

1537. Collection of tax on motor vehicles, trailers and

semitrailers.

1538. Precollection of tax.

1539. Bulk and auction sales.

1540. Collection upon failure to request reassessment, review

or appeal.

1541. Lien for taxes.

1542. Suit for taxes.

1543. Tax suit comity.

1544. Service.

1545. Collection and payment of tax on credit sales.

1546. Prepayment of tax.

1547. Refund of sales tax attributed to bad debt.

1548. Registration of transient vendors.

1549. Bond.

1550. Notification to department and inspection of records.

1551. Seizure of property.

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1552. Fines.

1553. Transient vendors subject to subpart.

1554. Promoters.

§ 1531. Assessment.

(a) Authorization.--The department is authorized and

required to make the inquiries, determinations and assessments

of the tax imposed by this subpart. This subsection includes

interest, additions and penalties.

(b) Notice of assessment.--A notice of assessment and demand

for payment shall be mailed to the taxpayer. The notice shall

specify the basis of the assessment.

relieved of liability under this section if the marketplace

facilitator can show to the satisfaction of the department that

the failure to collect the correct amount of tax was due to

incorrect information given to the marketplace facilitator by a

marketplace seller.

(d) Marketplace seller.--A marketplace seller is relieved of

liability under this section pertaining to those sales made

through a marketplace facilitator, when the marketplace

facilitator certifies to the seller that the marketplace

facilitator will collect, report and remit the proper sales tax,

unless the seller gave incorrect information to the marketplace

facilitator.

§ 1532. Mode and time of assessment.

(a) Underpayment of tax.--Within a reasonable time after a

return is filed, the department shall examine the return. If the

return shows a greater tax due or collected than the amount of

tax remitted with the return, the department shall issue an

assessment for the difference and 3% of the difference. The

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assessment shall be paid to the department within 10 days after

a notice of the assessment has been mailed to the taxpayer. If

the assessment is not paid within 10 days, an additional 3% of

the difference for each month during which the assessment

remains unpaid shall be added to the assessment total, but the

total of all additions shall not exceed 18% of the difference

shown on the assessment.

(b) Understatement of tax.--If the department determines

that a return of a taxpayer understates the amount of tax due,

it shall determine the proper amount and shall ascertain the

deficiency between the amount of tax shown in the return and the

amount determined. A notice of assessment for the deficiency and

the reasons for the deficiency shall be sent to the taxpayer.

The deficiency shall be paid to the department within 30 days

after a notice of the assessment has been mailed to the

taxpayer.

return required by this chapter, the department may make an

estimated assessment, based on information available, of the

proper amount of tax owed by the taxpayer. A notice of

assessment in the estimated amount shall be sent to the

taxpayer. The tax shall be paid within 30 days after a notice of

the estimated assessment has been mailed to the taxpayer.

(d) Authority to establish effective rates by business

classification.--The department may:

(1) make the studies necessary to compute effective

rates by business classification, based upon the ratio

between:

(i) the tax required to be collected; and

(ii) taxable sales; and

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(2) use the rates in computing the tax liability of a

taxpayer.

(e) Tax rate.--

(1) Except as set forth in paragraph (2), an assessment

based upon the rates shall be prima facie correct.

(2) If a taxpayer establishes that the rate is based on

a sample inapplicable to the taxpayer, the rate shall not be

considered.

§ 1533. Reassessment.

A taxpayer against whom an assessment is made may petition

the department for a reassessment under Article XXVII of the Tax

Reform Code of 1971.

§ 1534. Assessment to recover erroneous refunds.

The department may file an assessment to recover an erroneous

refund. The assessment must be filed within the later of:

(1) two years of granting a refund or credit; or

(2) the period in which an assessment could have been

filed by the department with respect to the transaction

pertaining to which the refund was granted.

§ 1535. Burden of proof.

In a petition for reassessment, review or appeal, the burden

of proof shall be upon the petitioner or appellant.

§ 1536. Collection of tax.

(a) Collection by department.--The department shall collect

the tax in the manner provided by law.

(b) Remitters.--

(1) This subsection applies to all of the following:

(i) A person that:

(A) maintains a place of business in this

Commonwealth; and

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(B) sells or leases tangible personal property

or services, with the exception of a marketplace

seller who solely makes sales through a marketplace

facilitator that is required to collect sales tax on

the marketplace seller's behalf and receives a

certification from the marketplace facilitator that

the marketplace facilitator will collect, report and

remit the proper sales tax, the sale or use of which

is subject to tax.

(ii) A person not otherwise required to collect tax

that:

(A) delivers tangible personal property to a

location within this Commonwealth; and

(B) unpacks, positions, places or assembles the

tangible personal property.

(2) Except as set forth in section 1537(a) (relating to

collection of tax on motor vehicles, trailers and

semitrailers), a person subject to paragraph (1)(i) shall:

(i) collect the tax from the purchaser or lessee at

the time of making the sale or lease; and

(ii) remit the tax to the department.

(3) All of the following apply to a person subject to

paragraph (1)(ii):

(i) The person shall collect the tax from the

purchaser at the time of delivery. The person is deemed

to be selling or leasing tangible personal property or

services, the sale or use of which is subject to the tax

imposed under this subpart.

(ii) The person shall remit the tax to the

department if:

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(A) the person delivering the tangible personal

property is responsible for collecting any portion of

the purchase price of the tangible personal property

delivered; and

(B) the purchaser has not provided the person

with proof that:

(I) the tax imposed by this chapter has been

or will be collected by the seller; or

(II) the purchaser provided the seller with

a valid exemption certificate.

(4) (i) A vendor maintaining a place of business within

this Commonwealth under paragraph (1)(vii) of the

definition of "maintaining a place of business in this

Commonwealth" under section 1102 (relating to

definitions) in calendar year 2018 shall collect sales

tax from July 1, 2019, through March 31, 2020.

(ii) A vendor maintaining a place of business within

this Commonwealth under paragraph (1)(vii) of the

definition of "maintaining a place of business in this

Commonwealth" under section 1102 in calendar years after

2018 shall collect sales tax from the second quarter,

beginning April 1, of the following calendar year through

the first quarter, ending March 31, of the next calendar

year.

(5) Each person that is required under this chapter to

collect tax from another person and that fails to collect the

proper amount of tax shall be liable for the full amount of

the tax which should have been collected.

(b.1) Collection by marketplace facilitators.--A marketplace

facilitator maintaining a place of business in this Commonwealth

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must collect and remit the sales tax on all sales, leases and

deliveries of tangible personal property, and all sales of

services, by marketplace sellers whose sales are facilitated

through the marketplace facilitator's forum.

(1) Except as provided under paragraph (2), if the tax

does not apply to the sale or lease of tangible personal

property or services, the purchaser or lessee shall furnish

to the vendor a certificate indicating that the sale is not

legally subject to the tax. The certificate shall be in the

form prescribed by the department.

(2) An exemption certificate under paragraph (1) need

not be furnished if:

(i) the tangible personal property or service is of

a type which is never subject to the tax imposed; or

(ii) the sale or lease is in interstate commerce.

(3) If a series of transactions are not subject to tax,

a purchaser or user may furnish the vendor with a single

exemption certificate in the form, and valid for the period

of time, prescribed by the department.

(4) The department shall provide each school district

and intermediate unit with a permanent tax exemption number.

(5) An exemption certificate shall relieve the vendor

from liability under this section if the exemption

certificate:

(i) is complete and regular;

(ii) on its face discloses a valid basis of

exemption; and

(iii) is taken in good faith.

(6) An exemption certificate shall be presumed to be

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taken in good faith and the burden of proving otherwise shall

be on the department if all of the following conditions are

met:

(i) The exemption certificate is accepted by a

vendor in the ordinary course of the vendor's business.

(ii) The exemption certificate is from any of the

following:

(A) An individual domiciled within this

Commonwealth.

(B) An association, fiduciary, partnership,

corporation or other entity which:

(I) is authorized to do business within this

Commonwealth; or

(II) has an established place of business

within this Commonwealth.

(iii) The exemption certificate:

(A) on its face discloses a valid basis of

exemption consistent with the activity of the

purchaser and character of the property or service

being purchased; or

(B) is provided to the vendor by a charitable,

religious or educational association or by a

volunteer firefighters' relief association or

volunteer firemen's organization and contains the

charitable exemption number of the association or

organization.

(iv) If the purchase price is at least $200, the

exemption certificate is accompanied by a sworn

declaration, on a form provided by the department, of an

intended usage of the property or service which would

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render the usage or service nontaxable.

(c.1) Authorization to obtain information.--In lieu of the

exemption certificate required under subsection (c), the

department may authorize a vendor to obtain similarly specific

information from the vendor's purchasers. This information

includes, but is not limited to, the name and address of the

purchaser and a valid basis for exemption. The purchases made

under this subsection must be made with a verifiable source of

payment connected to the specific purchaser. The information

regarding each purchase shall be available at the time the

return is filed for the period covering the purchase. The

information shall be retained in accordance with section 1592

(relating to keeping of records). No authority shall be granted

or exercised, except upon application to and acceptance by the

department, in the department's discretion. If authority is

granted, it shall be subject to conditions specified by the

department.

(d) Direct payment permits.--

(1) The department may authorize a purchaser or lessee

to pay the tax directly to the department and waive the

collection of the tax by the vendor if the purchaser or

lessee acquires tangible personal property or services under

circumstances which make it impossible at the time of

acquisition to determine the manner in which the tangible

personal property or service will be used.

(2) Authorization under paragraph (1) requires:

(i) application to the department; and

(ii) issuance by the department of a direct payment

permit.

(3) If a direct payment permit is granted:

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(i) its use shall be subject to conditions specified

by the department; and

(ii) payment of tax on all acquisitions under the

permit shall be made directly to the department by the

permit holder.

§ 1537. Collection of tax on motor vehicles, trailers and

semitrailers.

(a) Requirement.--

(1) Notwithstanding section 1536(b)(1) (relating to

collection of tax), except as set forth in paragraph (2),

tax due on the sale at retail or use of a motor vehicle,

trailer or semitrailer required by law to be registered under

75 Pa.C.S. Ch. 13 (relating to registration of vehicles)

shall be paid by the purchaser or user directly to the

Department of Transportation under 75 Pa.C.S. § 1103.1(b)

(relating to application for certificate of title).

(2) Paragraph (1) does not apply to a mobile home.

(b) Tax paid or not due.--The Department of Transportation

may not issue a certificate of title under 75 Pa.C.S. § 1105

(relating to issuance of certificate of title) until the tax has

been paid or evidence satisfactory to the Department of

Transportation has been given to establish that tax is not due.

Department of Transportation may cancel or suspend a record of

certificate of title or registration of a motor vehicle, trailer

or semitrailer if the check received in payment of the tax is

not paid upon demand.

(d) First encumbrance.--The tax shall be considered as a

first encumbrance against a vehicle under subsection (a)(1), and

the vehicle may not be transferred without payment in full of

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the tax and interest or penalties which have accrued.

(e) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Mobile home." As defined in 75 Pa.C.S. § 102 (relating to

definitions).

"Motor vehicle." As defined in 75 Pa.C.S. § 102.

"Semitrailer." As defined in 75 Pa.C.S. § 102.

"Trailer." As defined in 75 Pa.C.S. § 102.

§ 1538. Precollection of tax.

(a) Precollection of tax.--

(1) Except as set forth in paragraph (2), the department

may, by regulation, authorize or require particular

categories of vendors selling tangible personal property for

resale to precollect from the purchaser the tax which the

purchaser will collect upon making a sale at retail of the

tangible personal property.

(2) The department may not require a vendor to

precollect tax from a purchaser who purchases for resale more

than $1,000 worth of tangible personal property from the

vendor per year.

(b) Licensing.--If a vendor has been authorized to prepay

the tax to the person from whom the vendor purchased the

tangible personal property for resale, the vendor prepaying the

tax may, under the regulations of the department, be relieved

from the vendor's duty to secure a license if the duty arises

only by reason of the sale of the tangible personal property

with respect to which the vendor is, under authorization of the

department, to prepay the tax.

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(1) On making a sale at retail of tangible personal

property with respect to which the vendor has prepaid the

tax, the vendor shall separately state at the time of resale

the proper amount of tax on the transaction and reimburse the

taxes which the vendor has previously prepaid.

(2) If a vendor collects a greater amount of tax in a

reporting period than the vendor had previously prepaid upon

purchase of the property with respect to which the vendor

prepaid the tax, the vendor shall file a return and remit the

balance to the Commonwealth at the time when a return would

otherwise be due with respect to the sale.

§ 1539. Bulk and auction sales.

A person is subject to section 1403 of the Fiscal Code if the

person:

(1) sells or causes to be sold at auction, or sells or

transfers in bulk, at least 51% of a stock of goods, wares,

merchandise, fixtures, machinery, equipment, buildings or

real estate involved in a business for which the person is

licensed or required to be licensed under this subpart; or

(2) is liable for filing use tax returns under this

subpart.

§ 1540. Collection upon failure to request reassessment, review

or appeal.

(a) Collection.--The department may collect a tax:

(1) If, after notice to the taxpayer, an assessment of

tax is not paid within 10 days, for assessments made under

section 1532(a) (relating to mode and time of assessment), or

30 days, for assessments made under section 1532(b), as long

as no petition for reassessment has been filed.

(2) Within 60 days from the date of reassessment, if no

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petition for review has been filed.

(3) Unless an appeal is made, within 30 days from:

(i) the date of the decision of the Board of Finance

and Revenue upon a petition for review, if no appeal has

been made; or

(ii) expiration of the board's time for acting upon

the petition, if no appeal has been made.

(4) In all cases of judicial sales, receiverships,

assignments or bankruptcies.

(b) Raising defenses.--

(1) Except as set forth in paragraph (2), in a

proceeding for the collection of tax, a taxpayer may not

raise a defense which could have been determined by the

department, the board or a court of competent jurisdiction.

(2) In a motion to stay a proceeding for the collection

of tax, a taxpayer may raise any of the following defenses:

(i) The department's failure to mail notice of

assessment or reassessment.

(ii) Payment of assessment or reassessment.

§ 1541. Lien for taxes.

(a) Lien imposed.--

(1) If a person liable to pay a tax neglects or refuses

to pay the tax, the amount, including interest, addition or

penalty, together with any other costs, shall be a lien in

favor of the Commonwealth upon the property, both real and

personal, of the person, but only after the lien has been

entered and docketed of record by the prothonotary of the

county where the property is situated.

(2) The department may, at any time, transmit to the

prothonotaries of the respective counties certified copies of

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all liens for taxes imposed by this subpart and penalties and

interest.

(3) It shall be the duty of each prothonotary receiving

the lien to enter and docket the lien of record in the

prothonotary's office, which shall be indexed as judgments

are now indexed.

(4) A prothonotary may not require, as a condition

precedent to the entry of the liens, the payment of the costs

of entering the liens into record.

(b) Priority of lien and effect on judicial sale and no

discharge by sale on junior lien.--

(1) The lien imposed under this section shall:

(i) have priority from the date of its recording;

(ii) be fully paid and satisfied out of the proceeds

of a judicial sale of property subject to the lien before

any other obligation, judgment, claim, lien or estate to

which the property may subsequently become subject,

except costs of the sale and of the writ upon which the

sale was made and real estate taxes and municipal claims

against the property; and

(iii) be subordinate to mortgages and other liens

existing and duly recorded or entered of record prior to

the recording of the tax lien.

(2) For a judicial sale of property, subject to a lien

imposed under this section on a lien or claim over which the

lien imposed under this section has priority, the sale shall

discharge the lien imposed under this section only to the

extent that the proceeds are applied to its payment, and the

lien shall continue in full force and effect as to the

balance remaining unpaid.

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(3) An inquisition or condemnation may not be made on a

judicial sale of real estate made by the Commonwealth under

this section. The following shall apply:

(i) The lien of the taxes, interest and penalties

shall continue for five years from the date of entry and

may be revived and continued in the manner provided for

renewal of judgments, on or after March 4, 1971, or as

may be provided in the Fiscal Code.

(ii) A writ of execution may directly issue on the

lien without the issuance and prosecution to judgment of

a writ of scire facias, if not less than 10 days before

issuance of an execution on the lien, notice of the

filing and the effect of the lien shall be sent by

registered mail to the taxpayer at the taxpayer's last

known post office address.

(iii) The lien shall have no effect on a stock of

goods, wares or merchandise regularly sold or leased in

the ordinary course of business by the person against

whom the lien has been entered, until a writ of execution

has been issued and a levy made upon the stock of goods,

wares and merchandise.

fails to carry out a duty imposed under this section commits a

misdemeanor and shall, upon conviction, be sentenced to pay a

fine of $1,000 or to imprisonment for not more than one year, or

both.

(d) Priority of tax.--Except as provided in this chapter,

each tax imposed by this part which is due and unpaid and is not

collectible under section 1525 (relating to tax held in trust

for Commonwealth) shall be paid from the first money available

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for distribution in priority to each other claim and lien,

except as the laws of the United States may give a prior claim

to the Federal Government. A person charged with the

administration or distribution of a property or estate who

violates this section shall be personally liable for taxes

imposed by this part, which are accrued and unpaid and are

chargeable against the person whose property or estate is being

administered or distributed.

(e) Other remedies.--Subject to the limitations in this

subpart as to the assessment of taxes, nothing in this section

shall be construed to restrict, prohibit or limit the use by the

department in collecting taxes finally due and payable of

another remedy or procedure available at law or equity for the

collection of debts.

§ 1542. Suit for taxes.

(a) Commencement.--The department may, within three years

after a tax is finally due and payable, commence an action in

the courts of the United States, this Commonwealth or any state

in the name of the Commonwealth to collect tax due together with

additions, interest, penalties and costs as provided at law or

in equity for the collection of ordinary debts.

(b) Procedure.--The Attorney General shall prosecute the

action and, except as provided in this subpart, the Rules of

Civil Procedure and the laws of this Commonwealth relating to

civil procedures and remedies shall be available in the

proceedings.

addition to any process, remedy or procedure for the collection

of taxes provided by this subpart or by the laws of this

Commonwealth. This section shall not be limited by nor is

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intended to limit any process, remedy or procedure.

§ 1543. Tax suit comity.

The courts of this Commonwealth shall recognize and enforce a

liability for sales and use tax lawfully imposed by another

state, if the other state extends a like comity to this

Commonwealth.

§ 1544. Service.

A person maintaining a place of business within this

Commonwealth shall appoint the Secretary of the Commonwealth as

the person's agent for the acceptance of service of process or

notice in proceedings for the enforcement of the civil

provisions of this part. The following shall apply:

(1) Service made upon the Secretary of the Commonwealth

as the agent shall have the same legal force and validity as

if the service had been personally made upon the person.

(2) If service cannot be made upon the person in the

manner provided by other laws of this Commonwealth relating

to service of process, service may be made upon the Secretary

of the Commonwealth, and a copy of the process or notice

shall also be personally served upon an agent or

representative of the person who may be found within this

Commonwealth.

(3) If no agent or representative may be found, a copy

of the process or notice shall be sent by registered mail to

the person at the last known address of the person's

principal place of business, home office or residence.

§ 1545. Collection and payment of tax on credit sales.

If a sale subject to tax under this subpart is wholly or

partly on credit, the vendor shall require the purchaser to pay

in cash at the time the sale is made, or within 30 days

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thereafter, the total amount of tax due upon the entire purchase

price. The vendor shall remit the tax to the department,

notwithstanding whether payment was made by the purchaser to the

vendor, and the next return must be filed under section 1513

(relating to time for filing returns).

§ 1546. Prepayment of tax.

If a vendor is forbidden by law to charge and collect the

purchase price in advance of or at the time of delivery, the

vendor shall prepay the tax as required by section 1522

(relating to time of payment). If the purchaser fails to pay to

the vendor the total amount of the purchase price and the tax,

and the amount is written off as uncollectible by the vendor,

the vendor shall not be liable for the tax and shall be entitled

to a credit or refund of the tax paid. The following shall

apply:

(1) If the purchase price is later collected, in whole

or in part, the amount collected shall be first applied to

the payment of the entire tax portion of the bill and shall

be remitted to the department by the vendor with the first

return filed after the collection.

(2) For tax prepaid prior to March 4, 1971, credit may

be claimed on returns filed for the periods prior to March 4,

1971.

(3) Tax prepaid after March 4, 1971, shall be subject to

refund upon petition to the department under section 1561

(relating to refunds), filed within 105 days of the close of

the fiscal year in which the accounts are written off.

§ 1547. Refund of sales tax attributed to bad debt.

(a) Conditions.--A vendor may file a petition for refund of

sales tax paid to the department that is attributed to a bad

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debt if all of the following apply:

(1) The purchaser fails to pay the total purchase price.

(2) The purchase price is written off, either in whole

or in part, as a bad debt on the books and records of the

vendor or an affiliate of the vendor.

(3) The debt has been deducted for Federal income tax

purposes under section 166 of the Internal Revenue Code of

1986.

(b) Petition.--A petition for refund under this section must

be filed with the department within the time limitations

prescribed by section 3003.1(a) of the Tax Reform Code of 1971.

private-label credit card accounts not qualifying under

subsection (a), a vendor or lender that makes an election under

subsection (d) may file a petition for refund of sales tax that

the vendor has previously reported and paid to the department if

all of the following conditions are met:

(1) No refund was previously allowed with respect to the

portion of the account written off as a bad debt.

(2) The account has been found worthless and written

off, either in whole or in part, as bad debt on the books and

records of the lender or an affiliate of the lender.

(3) The account has been deducted for Federal income tax

purposes under section 166 of the Internal Revenue Code of

1986 by the lender or an affiliate of the lender.

(d) Joint election for refund.--In order to be eligible for

a refund under subsection (c), the lender and the vendor must

execute and file with the department a joint election, signed by

both parties, designating which party is entitled to claim the

refund. The election may not be revoked unless a written notice

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is signed by the party that signed the election being revoked

and is filed with the department.

(e) Payment of refund.--The refund authorized by this

section is limited to the sales tax paid to the department that

is attributed to the bad debt, less any discount under section

1526 (relating to discount). The following apply:

(1) Partial payments by the purchaser shall be prorated

between the original purchase price and the sales tax due on

the sale.

(2) Payments made on a transaction which includes both

taxable and nontaxable components shall be allocated

proportionally between the taxable and nontaxable components.

(f) Assignment of right to petition.--A vendor or a lender

may assign the vendor's or lender's right to petition and

receive a refund of sales tax attributed to a bad debt to an

affiliate.

(g) Exceptions.--No refund shall be granted under this

section for any of the following:

(1) Interest.

(2) Finance charges.

(3) Expenses incurred in attempting to collect an

account receivable.

(h) Documentation.--Documentation requirements are as

follows:

(1) A person claiming a refund under this section shall,

on request, make available documentation supporting the

claimed refund, including:

(i) The date of the original sale and the name and

Pennsylvania sales tax license number of the retailer.

(ii) The name and address of the purchaser.

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(iii) The amount that the purchaser paid or agreed

to pay.

(iv) Taxable and nontaxable charges.

(v) The amount on which the retailer reported and

paid sales tax.

(vi) All payments or other credits applied to the

account of the purchaser.

(vii) Evidence that the uncollected amount was:

(A) designated as a bad debt in the books and

records of the vendor or lender, as appropriate; and

(B) claimed as a bad debt deduction for Federal

income tax purposes.

(viii) The county in which local sales tax was

incurred.

(ix) The unpaid portion of the sales price.

(x) A certification, under penalty of perjury, that

no person collected money on the bad debt for which the

refund is claimed.

(xi) Any other information required by the

department.

(2) A person claiming a refund under this section may

provide alternative forms of documentation to the department

if appropriate in light of the volume and character of

uncollectible accounts. The following apply:

(i) If a vendor remits sales or use tax to the

Commonwealth and to another state, the entity claiming a

refund under this section may use an apportionment method

to substantiate the amount of Pennsylvania tax included

in the bad debts to which the refund applies.

(ii) The apportionment method must use the vendor's

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Pennsylvania and non-Pennsylvania sales, the vendor's

taxable and nontaxable sales and the amount of tax the

vendor remitted to Pennsylvania.

(i) Collection of tax of prior bad debt.--

(1) If the purchase price which is attributed to a prior

bad debt refund is collected in whole or in part by the

vendor or lender or an affiliate of the vendor or lender, the

entity claiming the refund shall remit the proportional tax

to the department with the first return filed after the

collection. If the entity is not required to file periodic

returns, the entity shall remit the proportional tax to the

department with another return under section 1513 (relating

to time for filing returns).

(2) Consideration received for the assignment, sale or

other transfer of a bad debt with respect to which a refund

has been granted shall be deemed to be a collection of a

prior bad debt. This paragraph does not apply to a transfer

to an entity that is part of the same affiliated group, as

defined by section 1504 of the Internal Revenue Code of 1986.

(3) A person that collects, in whole or in part, the

purchase price attributed to a prior bad debt refund is

required to maintain adequate documentation to allow the

department to determine whether the purchase price attributed

to a prior bad debt refund has been collected. Information

under this paragraph includes the pertinent facts required by

subsection (h).

(4) If the department determines that a prior bad debt

has been collected, in whole or in part, and that the

proportional tax has not been properly reported and paid to

the department, the person that claimed the refund on the

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transaction shall report and pay the proportional tax to the

department plus applicable interest and penalty under this

chapter.

(j) Interest.--Notwithstanding section 806.1 of the Fiscal

Code, no interest shall be paid by the Commonwealth on refunds

of sales tax attributed to bad debt under this section.

(k) Procedure.--

(1) No refund or credit of sales tax shall be made for

any uncollected purchase price or bad debt except as

authorized by this section.

(2) No deduction or credit for bad debt may be taken on

a return filed with the department.

(3) This section provides the exclusive procedure for

claiming a refund or credit of sales tax attributed to

uncollected purchase price or bad debt.

(l) Bad debts.--A private-label credit card does not

authorize a refund with respect to a bad debt attributable to a

sale by a person not related to the private-label credit card.

(m) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection:

"Affiliate." A person that is:

(1) an affiliated entity, under section 1504 of the

Internal Revenue Code of 1986, of a vendor; or

(2) a person described under paragraph (1) or (2) of the

definition of "lender" that would be an affiliated entity,

under section 1504 of the Internal Revenue Code of 1986, of a

vendor but for the fact the person is not a corporation, an

assignee or another transferee of a person described under

paragraph (1) or (2) of the definition of "lender."

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"Lender." Any of the following:

(1) A person that owns or has owned a private-label

credit card account purchased directly from a vendor that

reported the tax under this subpart.

(2) A person that owns or has owned a private-label

credit card account under a contract directly with a vendor

that reported the tax under this subpart.

(3) A person that is:

(i) an affiliate of a person described under

paragraph (1) or (2); or

(ii) an assignee or other transferee of a person

described under paragraph (1) or (2).

"Private-label credit card." As follows:

(1) A charge card, credit card or other instrument

serving a similar purpose which:

(i) carries, refers to or is branded with the name

or logo of a vendor; and

(ii) can be used for purchases from the vendor.

(2) The term does not include a card or instrument which

may also be used to make purchases from a person other than

the vendor whose name or logo appears on the card or

instrument or that vendor's affiliates.

§ 1548. Registration of transient vendors.

(a) Registration required.--Prior to conducting business or

commencing operations within this Commonwealth, a transient

vendor shall register with the department. The application for

registration must be in the form and contain information the

department prescribes and shall set forth truthfully and

accurately the information required by the department. The

registration must be renewed and updated annually.

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(b) Certificate.--Upon registration and the posting of the

bond required by section 1549 (relating to bond), the department

shall issue to a transient vendor a certificate valid for one

year. Upon renewal of registration, the department shall issue a

new certificate, valid for one year, if the department is

satisfied that the transient vendor has complied with this

chapter.

possess the certificate at all times when conducting business

within this Commonwealth and shall exhibit the certificate upon

demand by authorized employees of the department or a law

enforcement officer.

(d) Information on certificate.--The certificate issued by

the department shall state that the transient vendor named on

the certificate has registered with the department and shall

provide notice to the transient vendor of all of the following:

(1) The requirements of section 1550(a) (relating to

notification to department and inspection of records).

(2) Failure to notify or giving false information to the

department may result in suspension or revocation of the

transient vendor's certificate.

(3) Conducting business within this Commonwealth after a

certificate has been suspended or revoked may result in

criminal conviction and the imposition of fines or other

penalties.

§ 1549. Bond.

(a) Posting.--Upon registration with the department, a

transient vendor must post a bond with the department in the

amount of $500 as surety for compliance with the provisions of

this subpart.

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(b) Reduction or elimination.--After a period of

demonstrated compliance with the provisions of this subpart, or

if the transient vendor provides the license number of a

promoter that has notified the department of a show under

section 1554(a) (relating to promoters), the department may

reduce the amount of bond required of a transient vendor or may

eliminate the bond entirely.

may file a request for voluntary suspension of certificate with

the department. If the provisions of this subpart have been

complied with and the department has possession of the transient

vendor's certificate, the department shall return the bond

posted to the transient vendor.

§ 1550. Notification to department and inspection of records.

(a) Notification.--Prior to entering this Commonwealth to

conduct business, a transient vendor shall notify the department

in writing of each location where the transient vendor intends

to conduct business and each date on which the transient vendor

intends to conduct business.

(b) Inspection of sales records.--When conducting business

in this Commonwealth, a transient vendor shall permit authorized

employees of the department to inspect the transient vendor's

sales records, including sales receipts and inventory or price

lists, and tangible personal property offered for sale at

retail.

may suspend or revoke a certificate issued to a transient vendor

if the transient vendor:

(1) fails to notify the department under subsection (a);

(2) provides the department with false information

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regarding the conduct of business within this Commonwealth;

(3) fails to collect sales tax on all tangible personal

property or services sold which are subject to the sales tax;

(4) fails to file with the department a tax return as

required by section 1513 (relating to time for filing

returns).

(d) Regulations.--The department shall promulgate

regulations necessary to implement this section.

§ 1551. Seizure of property.

(a) Seizure for noncompliance.--If a transient vendor

conducting business in this Commonwealth fails to exhibit a

valid certificate upon demand by an authorized employee of the

department, the authorized employee may seize, without warrant,

the tangible personal property and the means of transportation

used to transport or carry the property. Except as set forth in

subsection (b), property seized shall be deemed contraband and

shall be subject to immediate forfeiture proceedings instituted

by the department under procedures promulgated by regulation.

(b) Release of seized property.--Property seized under

subsection (a) shall be released upon any of the following:

(1) Presentation of a valid certificate to an authorized

employee of the department.

(2) Registration by the transient vendor with the

department and the posting of a bond in the amount of $500,

either immediately or within 15 days after the property is

seized.

§ 1552. Fines.

A transient vendor conducting business within this

Commonwealth when the transient vendor's certificate is

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suspended or revoked under sections 1549(b) (relating to bond)

and 1550(c) (relating to notification to department and

inspection of records), commits a misdemeanor of the third

degree for each offense.

§ 1553. Transient vendors subject to subpart.

A transient vendor shall be subject to the provisions of this

subpart in the same manner as a vendor who maintains a place of

business within this Commonwealth.

§ 1554. Promoters.

(a) Application for license.--A promoter of a show in this

Commonwealth may file with the department an application for a

promoter's license stating the location and dates of each show.

The application must be filed at least 30 days prior to the

opening of the first show and be in the form as the department

may prescribe.

(b) Issuance.--Except as otherwise provided, within 15 days

after receipt of an application for a license, the department

shall issue to the promoter, without charge, a license to

operate a show. If application for a license under this section

has been timely filed and if the license has not been received

by the promoter prior to the opening of the show, the

authorization contained in this section with respect to the

obtaining of a promoter's license shall be deemed to have been

complied with, unless the promoter receives notice from the

department denying the application for a promoter's license.

1102 (relating to definitions) shall comply with all the

provisions of this subpart applicable to vendors and with the

provisions of this section applicable to promoters.

(d) License required.--A licensed promoter may not permit a

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person to display for sale or sell tangible personal property or

services subject to tax under Subchapter A of Chapter 13

(relating to imposition of tax) at a show unless the person is

licensed under Subchapter D of Chapter 13 (relating to licenses)

and provides to the promoter the information required under

section 1593 (relating to reports and records of promoters).

(e) Penalties.--

(1) A licensed promoter is subject to denial of a

license or revocation of an existing license issued under

this section for any of the following:

(i) Permitting a person to display for sale or to

sell tangible personal property or service without first

having been licensed under Subchapter D of Chapter 13.

(ii) Failing to maintain records of a show under

section 1593.

(iii) Knowingly maintaining false records.

(iv) Failing to comply with this section or a

regulation promulgated by the department pertaining to

shows.

(2) In addition to the penalties under paragraph (1),

the department may deny a promoter a license certificate to

operate a show for a period of not more than six months from

the date of the denial. The penalty shall be in addition to

any other penalty imposed by this subpart.

(3) Within 20 days of notice of denial or revocation of

a license by the department, the promoter may petition the

department for a hearing under 2 Pa.C.S. (relating to

administrative law and procedure).

SUBCHAPTER E

REFUNDS AND CREDITS

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Sec.

1561. Refunds.

1562. Refund petition.

1563. Extended time for filing special petition for refund.

§ 1561. Refunds.

The following apply:

(1) The department shall, under Article XXVII of the Tax

Reform Code of 1971, refund all taxes, interest and penalties

paid to the Commonwealth under this subchapter to which the

Commonwealth is not rightfully entitled.

(2) Refunds shall be made to the person or the person's

heir, successor, assign or other personal representative who

paid the tax.

(3) A refund shall not be made under this section with

respect to a payment made by reason of an assessment with

respect to which a taxpayer has filed a petition for

reassessment under section 2702 of the Tax Reform Code of

1971 to the extent that the petition has been determined

adversely to the taxpayer by a decision which is no longer

subject to further review or appeal.

(4) Nothing in this section shall prohibit a taxpayer

who has filed a timely petition for reassessment from

amending the petition to a petition for refund if the

petitioner has paid the tax assessed.

§ 1562. Refund petition.

(a) General rule.--Except as provided for in section 1563

(relating to extended time for filing special petition for

refund) and subsection (b), the refund or credit of tax,

interest or penalty provided for in section 1561 (relating to

refunds) shall be made only if the person who has paid the tax

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files a petition for refund with the department under Article

XXVII of the Tax Reform Code of 1971 within the time limits of

section 3003.1 of the Tax Reform Code of 1971.

(b) Payment.--A refund or credit of tax, interest or penalty

paid as a result of an assessment made by the department under

section 1532 (relating to mode and time of assessment) shall be

made only if the person who has paid the tax files a petition

for a refund with the department under Article XXVII of the Tax

Reform Code of 1971 within the time limits of section 3003.1 of

the Tax Reform Code of 1971. The filing of a petition for refund

under this subsection shall not affect the abatement of

interest, additions or penalties to which the person may be

entitled by reason of payment of the assessment.

§ 1563. Extended time for filing special petition for refund.

(a) Filing.--A party to a transaction who has paid tax by

reason of a transaction with respect to which the department is

assessing tax against another person may, within six months

after the filing by the department of the assessment against the

other person, file a special petition for refund,

notwithstanding the person's failure to timely file a petition

under section 3003.1 of the Tax Reform Code of 1971.

(b) Applicability.--Article XXVII of the Tax Reform Code of

1971 shall apply to a special petition for refund, except that

the department may not act on the petition until there is a

final determination as to the propriety of the assessment filed

against the other party to the transaction.

to take advantage of the extended period of limitations,

overpayments by the petitioner shall be refunded to the extent

of the actual tax, without consideration of interest and

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penalties, paid by the other party to the transaction.

(d) Construction.--The purpose of this section is to avoid

duplicate payment of tax if a determination is made by the

department that one party to a transaction is subject to tax,

and another party to the transaction has previously paid tax

with respect to the transaction. This section shall be construed

as extending a right beyond that provided for by section 1562

(relating to refund petition) and not to limit section 1562.

SUBCHAPTER F

LIMITATIONS

Sec.

1571. Limitation on assessment and collection.

1572. Failure to file return.

1573. False or fraudulent return.

1574. Extension of limitation period.

§ 1571. Limitation on assessment and collection.

The amount of the tax imposed by this subpart shall be

assessed within three years after the date when the return under

section 1513(a) or (c) (relating to time for filing returns) is

filed or the end of the year in which the tax liability arises,

whichever occurs later. An assessment may be made at any time

during the period, notwithstanding that the department may have

made one or more previous assessments against the taxpayer for

the year in question, or for any part of the year. Credit may

not be given for a penalty previously assessed or paid.

§ 1572. Failure to file return.

If no return is filed, the amount of the tax due may be

assessed and collected at any time as to taxable transactions

not reported.

§ 1573. False or fraudulent return.

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If a taxpayer willfully files a false or fraudulent return

with intent to evade the tax imposed by this subpart, the amount

of tax due may be assessed and collected at any time.

§ 1574. Extension of limitation period.

Notwithstanding any other provision of this subpart, if,

before the expiration of the period in section 1571 (relating to

limitation on assessment and collection) for the assessment of a

tax, a taxpayer has consented in writing that the period be

extended, the amount of tax due may be assessed at any time

within the extended period. The extended period may be extended

further by subsequent consents in writing made before the

expiration of the extended period.

SUBCHAPTER G

INTEREST, ADDITIONS, PENALTIES AND CRIMES

Sec.

1581. Interest.

1582. Additions to tax.

1583. Penalties.

1584. Crimes.

1585. Abatement of additions or penalties.

§ 1581. Interest.

If an amount of tax imposed by this subpart is not paid to

the department on or before the last date prescribed for

payment, interest on the amount at the rate of 0.75% per month

for each month, or fraction of a month, shall be paid for the

period from the last date to the date paid. The last date

prescribed for payment shall be determined under section 1522(a)

or (c) (relating to time of payment) without regard to any

extension of time for payment. For an amount assessed as a

deficiency or as an estimated assessment, the date prescribed

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for payment shall be 30 days after notice of the assessment.

§ 1582. Additions to tax.

(a) Failure to file return.--For a failure to file a return

required by section 1511 (relating to persons required to make

returns) on the date prescribed for filing the return, including

any extensions, and for a return filed which understates the

true amount due by more than 50%, 5% of the amount of the tax

shall be added to the amount of tax due if the failure to file a

proper return is for not more than one month and an additional

5% for each additional month, or fraction of a month, during

which the failure continues, not to exceed 25% in the aggregate.

At least $2 shall be added to each failure to file a proper

return under this subsection.

(b) Addition for understatement.--There shall be added to

every assessment under section 1532(b) (relating to mode and

time of assessment) 5% of the amount of the understatement and

no addition to the tax shall be paid under section 1532(a).

section 1532(a), (b) or (c), there shall be added to the amount

of the deficiency interest at the rate of 0.75% per month for

each month, or fraction of a month, from the date prescribed by

section 1522(a) or (c) (relating to time of payment) for the

payment of the tax to the date of notice of the assessment.

§ 1583. Penalties.

(a) Penalty assessed as tax.--The penalties, additions,

interest and liabilities provided by this subpart shall be paid

upon notice and demand by the department and shall be assessed

and collected in the same manner as taxes. Except as otherwise

provided, any reference in this chapter to tax imposed by this

subpart shall also be deemed to refer to the penalties,

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additions, interest and liabilities provided by this chapter.

(b) Attempt to evade or defeat tax.--

(1) A person who willfully attempts to evade or defeat

the tax or the payment of the tax imposed by this subpart or

to assist another person to evade or defeat the tax or the

payment of the tax imposed by this subpart, or to receive a

refund improperly, shall, in addition to other penalties

provided by law, be liable for a penalty equal to one-half of

the total amount of the tax evaded.

(2) In a direct proceeding arising out of a petition for

reassessment or refund as provided in this chapter in which

an issue of fact is raised with respect to whether a return

is fraudulent or with respect to the propriety of the

imposition by the department of the penalty prescribed in

this subsection, the burden of proof shall be on the

department.

§ 1584. Crimes.

(a) Fraudulent return.--A person who, with intent to defraud

the Commonwealth, willfully makes or causes to be made a return

required by this subpart which is false commits a misdemeanor

and shall, upon conviction, be sentenced to pay a fine not

exceeding $2,000 or to imprisonment for not more than three

years, or both.

(b) Other crimes.--

(1) A person commits a misdemeanor and shall, upon

conviction, be sentenced to pay a fine not exceeding $1,000

and costs of prosecution or to imprisonment for not more than

one year, or both, for any of the following:

(i) Except as otherwise provided under subsection

(a), advertising, holding out or stating to the public or

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to a purchaser or user, directly or indirectly, that the

tax or any part of the tax imposed by this subpart will

not be added to the purchase price of the tangible

personal property or services described under paragraph

(1)(ii), (iii), (iv), (vi), (vii), (viii), (ix), (x),

(xi) and (xii) of the definition of "sale at retail" in

section 1102 (relating to definitions) or that the tax or

any part of the tax will be refunded, other than when the

person refunds the purchase price because of the property

being returned to the vendor.

(ii) For a person selling or leasing tangible

personal property or services subject to tax under this

subpart, except as otherwise provided, willfully failing

to collect the tax from the purchaser and timely

remitting the tax to the department or willfully failing

or neglecting to timely file a return or report required

by this subpart.

(iii) Refusing to timely pay a tax, penalty or

interest imposed or provided for under this subpart.

(iv) Willfully failing to preserve books, papers and

records as directed by the department or refusing to

permit the department or the department's authorized

agents to examine books, records or papers.

(v) Knowingly making an incomplete, false or

fraudulent return or report.

(vi) Preventing the full disclosure of the amount or

character of taxable sales purchases or use made by the

person or any other person.

(vii) Providing a person with a false statement as

to the payment of tax with respect to particular tangible

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personal property or services.

(viii) Creating or issuing a false or fraudulent

exemption certificate.

(2) Notwithstanding paragraph (1), a person may

advertise or hold out or state to the public or to a

purchaser or user, directly or indirectly, that the tax or

any part thereof imposed by this subpart will be absorbed and

paid by the person subject to the following conditions:

(i) The person shall expressly state on a receipt,

invoice, sales slip or other similar document evidencing

the sale given to the purchaser that the person will pay

the tax imposed by this subpart on behalf of the

purchaser and shall not indicate or imply that the

transaction is exempt or excluded from tax imposed by

this subpart.

(ii) A receipt, invoice, sales slip or other similar

document evidencing a sale given to the purchaser shall

separately state the amount of tax.

(iii) The person, when recording the sale in the

person's books and records, shall separately state the

purchase price and the tax.

(iv) The amount of tax shall be calculated by

multiplying the total purchase price by the rate of tax

imposed by Subchapter A (relating to imposition of tax).

(3) If a person advertises or holds out or states to the

public or to a purchaser or user, directly or indirectly,

that the person will absorb and pay the tax, subject to the

conditions of this subsection, the person shall be solely

responsible and liable for a tax imposed by this subpart,

notwithstanding any provisions of this subpart to the

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contrary, and shall not be entitled to a refund of tax.

(1) Subject to paragraph (2), notwithstanding any other

provision of this subpart, a person who purchases, installs

or uses in this Commonwealth an automated sales suppression

device or zapper or phantomware with the intent to defeat or

evade the determination of an amount due under this part

commits a misdemeanor. The following apply:

(i) A person who, for commercial gain, sells,

purchases, installs, transfers or possesses in this

Commonwealth an automated sales suppression device or

zapper or phantomware with the knowledge that the sole

purpose of the device is to defeat or evade the

determination of an amount due under this part commits a

misdemeanor and shall, upon conviction, be sentenced to

pay a fine specified under subparagraph (ii) or to

imprisonment for not more than one year, or both. A

person who uses an automated sales suppression device or

zapper or phantomware shall be liable for all taxes,

interest and penalties due as a result of the use of the

device.

(ii) If a person is guilty of an offense under this

paragraph and the person sold, installed, transferred or

possessed not more than three automated sales suppression

devices or zappers or phantomware, the person commits an

offense punishable by a fine of not more than $5,000.

(iii) If a person commits an offense under this

paragraph and the person sold, installed, transferred or

possessed more than three automated sales suppression

devices or zappers or phantomware, the person commits an

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offense punishable by a fine of not more than $10,000.

(2) This subsection shall not apply to a corporation

that possesses an automated sales suppression device or

zapper or phantomware for the sole purpose of developing

hardware or software to combat the evasion of taxes by use of

automated sales suppression devices or zappers or

phantomware.

(3) As used in this subsection, the following words and

phrases shall have the meanings given to them in this

paragraph unless the context clearly indicates otherwise:

"Automated sales suppression device" or "zapper." A

software program carried on a memory stick or removable

compact disc, accessed through an Internet link or through

any other means, that falsifies the electronic records of

electronic cash registers and other point-of-sale systems,

including transaction data and transaction reports.

"Electronic cash register." A device that keeps a

electronic device or computer system designed to record

transaction data for the purpose of computing, compiling or

processing retail sales transaction data in whatever manner.

"Phantomware." A hidden programming option, which is

either preinstalled or installed at a later time, embedded in

the operating system of an electronic cash register or

hardwired into the electronic cash register that can be used

to create a virtual second till or may eliminate or

manipulate a transaction record that may or may not be

preserved in digital formats to represent the true or

manipulated record of transactions in the electronic cash

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"Transaction data." Includes information regarding items

purchased by a customer, the price for each item, a

taxability determination for each item, a segregated tax

amount for each of the taxed items, the amount of cash or

credit tendered, the net amount returned to the customer in

change, the date and time of the purchase, the name, address

and identification number of the vendor and the receipt or

invoice number of the transaction.

(d) Prosecution.--This section shall not preclude

prosecution under any other law.

(e) Penalties.--The penalties imposed by this section shall

be in addition to any other penalties imposed by this

subchapter.

§ 1585. Abatement of additions or penalties.

Upon the filing of a petition for reassessment or a petition

for refund as provided under this subpart by a taxpayer,

additions or penalties imposed upon the taxpayer by this part

may be waived or abated, in whole or in part, if the petitioner

has established that the petitioner has acted in good faith,

without negligence and with no intent to defraud.

SUBCHAPTER H

ENFORCEMENT AND EXAMINATIONS

Sec.

1591. Rules and regulations.

1592. Keeping of records.

1593. Reports and records of promoters.

1594. Examinations.

1595. Records and examinations of delivery agents.

1596. Unauthorized disclosure.

1597. Cooperation with other governments.

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1598. Interstate compacts.

1599. Bonds.

1599.1. Remote sales reports.

1599.2. Class actions.

§ 1591. Rules and regulations.

(a) General rule.--The department is charged with the

enforcement of this chapter and may prescribe, adopt, promulgate

and enforce rules and regulations consistent with this chapter

relating to any matter or thing pertaining to the administration

and enforcement of this chapter and the collection of taxes,

penalties and interest imposed by this chapter. The department

may prescribe the extent, if any, to which the rules and

regulations shall be applied without retroactive effect.

(b) Sales between affiliated interests.--

(1) In determining the purchase price of taxable sales

where, because of affiliation of interests between the vendor

and the purchaser or irrespective of an affiliation, or for

any other reason, the purchase price of the sale is not

indicative of the true value or fair price of the article,

the department shall determine the amount of constructive

purchase price upon which the tax shall be computed and

levied.

(2) The rules shall provide for a constructive amount of

a purchase price for each sale, which shall equal a price for

the article which would naturally and fairly be charged in an

arm's-length transaction in which the element of common

interests between vendor and purchaser, or, if no common

interest exists, any other element causing a distortion of

the price or value is absent.

(3) For the purpose of this chapter, if a taxable sale

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occurs between a parent corporation and a subsidiary

affiliate or controlled corporation of the parent, there

shall be a rebuttable presumption that because of the common

interest the transaction was not at arm's length.

§ 1592. Keeping of records.

(a) General rule.--Every person liable for a tax imposed by

this chapter or for the collection of a tax shall keep records,

render statements, make returns and comply with rules and

regulations as the department may prescribe. The department as

it deems necessary may require a person, by notice served upon

the person or by regulations, to make returns, render statements

or keep records as the department deems sufficient to show

whether or not the person is liable to pay or collect tax under

this chapter.

(b) Persons collecting tax from others.--A person liable to

collect tax from another person under this chapter shall file

reports, keep records, make payments and be subject to interest

and penalties provided for under this chapter in the same manner

as if the person was directly subject to the tax.

(1) A nonresident who does business in this Commonwealth

as a retail dealer shall keep adequate records of each

business and of the tax due, which shall be retained within

this Commonwealth unless retention outside this Commonwealth

is authorized by the department.

(2) Taxes collected from purchasers may not be sent

outside this Commonwealth without the written consent of, and

in accordance with conditions prescribed by, the department.

(3) The department may require a taxpayer who desires to

retain records or tax collections outside this Commonwealth

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to assume reasonable out-of-State audit expenses.

(d) Keeping of separate records.--A person doing business as

a retail dealer who at the same time is engaged in another

business which does not involve the making of sales taxable

under this chapter shall keep separate books and records of each

business to show the sales taxable under this chapter separately

from the sales not taxable under this chapter. If a person fails

to keep separate books and records, the person shall be liable

for tax at the rate designated under Subchapter A of Chapter 13

(relating to imposition of tax) on the entire purchase price of

sales from each business.

(e) Other methods.--If a vendor gives no sales memoranda or

uses registers showing only total sales, the vendor shall adopt

some method of segregating tax from sales receipts and keep

records showing the segregation, in accordance with proper

accounting and business practices.

(f) Collection and recording procedure.--

(1) A vendor may apply to the department for permission

to use a collection and recording procedure which will show

the information required by law with reasonable accuracy and

simplicity.

(2) The application shall contain a detailed description

of the procedure to be adopted.

(3) Permission to use the proposed procedure is not to

be construed as relieving the vendor from remitting the full

amount of tax collected.

(4) The department may revoke the permission upon 30

days' notice to the vendor.

(5) Refusal of the department to grant permission in

advance to use the procedure shall not be construed to

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invalidate a procedure which, upon examination, shows the

information required by law.

§ 1593. Reports and records of promoters.

Every licensed promoter shall keep a record of the date and

place of each show and the name, address, sales, use and hotel

occupancy license number of every person whom the promoter

permits to display for sale or sell tangible personal property

or services subject to tax under Subchapter A of Chapter 13

(relating to imposition of tax) at the show. The records shall

be open for inspection and examination at any reasonable time by

the department or a duly authorized representative, and the

records shall, unless the department consents in writing to an

earlier destruction, be preserved for three years after the date

the report was filed or the date it was due, whichever occurs

later, except that the department may by regulation require that

the records be kept for a longer period of time.

§ 1594. Examinations.

The following apply:

(1) The department or an authorized agent may examine

the books, papers and records of a taxpayer in order to

verify the accuracy and completeness of a return made or, if

no return was made, to ascertain and assess the tax imposed

by this chapter.

(2) The department may require the preservation of each

book, paper and record for a period deemed proper by the

department but not to exceed three years from the end of the

calendar year to which the records relate.

(3) Every taxpayer shall give to the department, or its

agent, the means, facilities and opportunity for examination

and investigation. The department may examine any person,

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under oath, concerning taxable sales or use by a taxpayer or

concerning any other matter relating to the enforcement or

administration of this chapter and for this purpose may

compel the production of books, papers and records and the

attendance of all persons, whether as parties or witnesses,

whom the department believes to have knowledge of the

matters.

(4) The procedure for hearings or examinations shall be

the same as that provided by the Fiscal Code relating to

inquisitorial powers of fiscal officers.

§ 1595. Records and examinations of delivery agents.

Every agent, for the purpose of delivery of goods shipped

into this Commonwealth by a nonresident, including common

carriers, shall maintain adequate records of the deliveries

under rules and regulations adopted by the department and shall

make the records available to the department upon request.

§ 1596. Unauthorized disclosure.

(a) Confidentiality and exceptions.--Information gained by

the department as a result of a return, examination,

investigation, hearing or verification required or authorized by

this chapter shall be confidential, except:

(1) for official purposes; or

(2) in accordance with proper judicial order or as

otherwise provided by law.

(b) Penalty.--A person unlawfully divulging information

commits a misdemeanor and shall, upon conviction, be sentenced

to pay a fine of not more than $1,000 along with the costs of

prosecution, or to imprisonment for not more than one year, or

both.

§ 1597. Cooperation with other governments.

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(a) General rule.--Subject to subsection (b),

notwithstanding section 1596 (relating to unauthorized

disclosure), the department may:

(1) permit the Commissioner of Internal Revenue of the

United States, the proper officer of any state or the

authorized representative of either officer to inspect the

tax returns of a taxpayer; or

(2) furnish to the officer or to an authorized

representative under paragraph (1) an abstract of the return

of a taxpayer or information concerning an item contained in

a return or disclosed by the report of an examination or

investigation of the return of a taxpayer.

(b) Condition.--Permission under subsection (a) shall be

granted only if Federal law or the statutes of another state

grant substantially similar privileges to the proper officer of

the Commonwealth charged with the administration of this

chapter.

§ 1598. Interstate compacts.

(a) General authority.--The Governor, or an authorized

representative, may confer with the Governor or authorized

representatives of other states regarding reciprocal use tax

collection between the Commonwealth and other states.

(b) Use of compacts and agreements.--The Governor, or an

authorized representative, may join with the authorities of

other states to conduct joint investigations, exchange

information, hold joint hearings and enter into compacts or

interstate agreements with other states to accomplish uniform

reciprocal use tax collections between those states who are

parties to a compact or interstate agreement and the

Commonwealth.

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§ 1599. Bonds.

(a) Taxpayer to file bond.--

(1) If the department deems it necessary to protect the

revenues to be obtained under this chapter, the department

may require a nonresident individual or a foreign

corporation, association, fiduciary, partnership or other

entity not authorized to do business in this Commonwealth or

not having an established place of business in this

Commonwealth and subject to the tax imposed by Subchapter A

of Chapter 13 (relating to imposition of tax) to file a bond

issued by a surety company authorized to do business in this

Commonwealth and approved by the Insurance Commissioner as to

solvency and responsibility, in an amount fixed by the

department, to secure the payment of tax or penalties due or

which may become due, from the individual or entity.

(2) To protect the revenues to be obtained under this

subchapter, the department shall require a nonresident

individual or foreign corporation, association, fiduciary,

partnership or other entity that is a building contractor or

supplier delivering building materials for work in this

Commonwealth and is not authorized to do business within this

Commonwealth or does not have an established place of

business in this Commonwealth and is subject to the tax

imposed by Subchapter A of Chapter 13, to file a bond issued

by a surety company authorized to do business in this

Commonwealth and approved by the Insurance Commissioner as to

solvency and responsibility, in an amount fixed by the

department to secure the payments of tax or penalties due or

which may become due, from the individual or entity.

(3) In addition to a bond under paragraph (1) or (2),

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the department may require a bond of a person petitioning the

department for reassessment in the case of an assessment of

more than $500 or where the ultimate collection is in

jeopardy.

(4) The department may, for a period of three years,

require a bond of a person who has, on three or more

occasions within a 12-month period, either filed a return or

made payment to the department more than 30 days late. The

following shall apply:

(i) If the department determines that a taxpayer is

to file a bond, the department shall give notice to the

taxpayer and specify the amount of the bond required.

(ii) The taxpayer shall file the bond within five

days after notice is given by the department unless,

within those five days, the taxpayer requests in writing

a hearing before the secretary or a representative.

(iii) The necessity, propriety and amount of the

bond shall be determined by the secretary or a

representative of the department at the hearing.

(iv) The determination shall be final and shall be

complied with within 15 days after notice is mailed to

the taxpayer.

(b) Securities in lieu of bond.--

(1) In lieu of the bond required by this section,

securities approved by the department or cash in an amount as

the department may prescribe may be deposited.

(2) Securities or cash shall be kept in the custody of

the department, which may, at any time, without notice to the

depositor, apply the securities or cash to tax, interest or

penalties due, and for that purpose the securities may be

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sold by the department at public or private sale upon five

days' written notice to the depositor.

under section 1541 (relating to lien for taxes) against a

taxpayer who fails to file a bond when required to do so under

this section. All funds received upon execution of the judgment

on the lien shall be refunded to the taxpayer with 3% interest

if a final determination is made that the taxpayer does not owe

any payment to the department.

§ 1599.1. Remote sales reports.

(a) Report.--

(1) Within 90 days of the publication of the notice

under subsection (b), the Independent Fiscal Office, in

conjunction with the department, shall submit a detailed

report outlining the plans concerning the implementation of

the legislation referenced in subsection (b) or other

substantially similar Federal legislation which would grant

the Commonwealth the authority to impose and collect the tax

under this chapter due on sales from remote sellers.

(2) The report under paragraph (1) shall be submitted to

the following:

(i) The chairperson and minority chairperson of the

Appropriations Committee of the Senate.

(ii) The chairperson and minority chairperson of the

Finance Committee of the Senate.

(iii) The chairperson and minority chairperson of

the Appropriations Committee of the House of

Representatives.

(iv) The chairperson and minority chairperson of the

Finance Committee of the House of Representatives.

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(3) The report under paragraph (1) shall include all of

the following:

(i) The amount of State money necessary to implement

the legislation described under subsection (b) or other

substantially similar legislation. The amount shall be

itemized, and all costs, including personnel, office

expenses and other related costs, shall be included.

(ii) The amount of State tax revenue expected to

result from the implementation of the legislation

described under subsection (b) or other substantially

similar legislation for the fiscal year and for the five

subsequent fiscal years.

(iii) The source of money that will be utilized to

pay for the legislation described under subsection (b) or

other substantially similar legislation implementation

program.

(iv) The legal and practical issues concerning the

propriety of collecting and enforcing the tax imposed

under this chapter from remote sellers.

(v) The number of other states which have a similar

law in effect and the success or deficiency of the law.

(vi) Proposed draft legislation concerning the

implementation of the legislation described under

subsection (b) or other substantially similar

legislation.

(vii) A detailed timetable on when separate tasks

must be completed for full implementation on an estimated

start date.

(b) Notice.--The secretary shall transmit notice to the

Legislative Reference Bureau for publication in the next

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available issue of the Pennsylvania Bulletin that Federal

legislation relating to remote sellers has been enacted.

seller" shall have the same meaning as defined in section 1351

(relating to definitions).

§ 1599.2. Class actions.

A class action may not be brought against a marketplace

facilitator on behalf of purchasers arising from or in any way

related to an overpayment of sales or use tax collected by the

marketplace facilitator, regardless of whether the action is

characterized as a tax refund claim. Nothing in this section

shall affect a purchaser's right to seek a refund from the

department under other provisions of this subpart.

SUBCHAPTER I

MISCELLANEOUS PROVISIONS

Sec.

1599.11. Appropriation for special purposes.

1599.12. Transfers to Public Transportation Assistance Fund.

§ 1599.11. Appropriation for special purposes.

The proceeds of the tax imposed under this part necessary for

the payment of refunds, enforcement or administration are

appropriated for those purposes.

§ 1599.12. Transfers to Public Transportation Assistance Fund.

(a) Transfer.--Revenues received on or after July 1, 1992,

from the imposition of the tax on periodicals shall be

transferred to the Public Transportation Assistance Fund

according to the formula described under subsection (b).

(b) Formula.--Within 30 days of the close of any calendar

month, 0.44% of the taxes received in the previous month under

this subchapter, less amounts collected in the previous calendar

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month under former 74 Pa.C.S. § 1314(d) (relating to Public

Assistance Transportation Fund), shall be transferred to the

Public Transportation Assistance Fund.

fiscal year 1991-1992, the secretary shall deposit $10,000,000

into the Public Assistance Transportation Fund from the

combination of money received under former 74 Pa.C.S. § 1314(d)

and transfers of periodical taxes received under this section.

(d) Further transfer.--Within 30 days of the close of any

calendar month, 0.09% of the taxes received in the previous

month under this chapter shall be transferred to the Public

Transportation Assistance Fund.

(e) Other transfer.--Within 30 days of the close of any

calendar month, 0.417% of the taxes received in the previous

month under this chapter shall be transferred to the Public

Transportation Assistance Fund.

SUBPART B

PERSONAL INCOME TAX

Chapter

21. Preliminary Provisions

22. Taxation Generally

23. Credits Against Tax

24. Contributions of Refunds by Checkoff

25. Withholding of Tax

26. Estimated Tax

27. Returns and Payment of Tax

28. Procedure and Administration

29. Miscellaneous Provisions

CHAPTER 21

PRELIMINARY PROVISIONS

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Sec.

2101. Scope of subpart.

2102. Definitions.

§ 2101. Scope of subpart.

This subpart relates to personal income tax.

§ 2102. Definitions.

The following words and phrases when used in this subpart

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Accepted accounting principles and practices." Unless

otherwise provided for in this subpart, the accounting

principles, systems or practices, including the installment

sales method of reporting, which are acceptable by standards of

the accounting profession and which are consistent with the

regulations of the department providing the principles and

practices.

"Association." As follows:

(1) A form of unincorporated enterprise which:

(i) is subject to the tax imposed under Article IV

of the Tax Reform Code of 1971; or

(ii) is required to make a return under section 6042

of the Internal Revenue Code of 1986.

(2) The term shall not include a partnership or

investment company.

"Business." An enterprise, activity, profession, vocation,

trade, joint venture, commerce or other undertaking of any

nature when engaged in as commercial enterprise and conducted

for profit or ordinarily conducted for profit, whether by an

individual, partnership, Pennsylvania S corporation, association

or other unincorporated entity.

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"Charitable trust." A trust operated exclusively for

religious, charitable, scientific, literary or educational

purposes.

"Claimant." A person who:

(1) is subject to the tax imposed under this subpart;

(2) is not a dependent of another taxpayer for purposes

of section 151 of the Internal Revenue Code of 1986; and

(3) is entitled to claim against the tax the poverty tax

provisions as provided under this subpart.

"Compensation." As follows:

(1) The term means and shall include salaries, wages,

commissions, bonuses and incentive payments, whether based on

profits or otherwise, fees, tips and similar remuneration

received for services rendered, whether directly or through

an agent, and whether in cash or in property.

(2) The term shall include:

(i) Any part of a distribution under a plan

described in section 409A(d)(1) of the Internal Revenue

Code of 1986, as amended, attributable to an elective

deferral of income or the income on an elective deferral

of income, whether paid or payable during employment or

to a retired individual upon or after retirement from

service.

(ii) Distributions or other payments commonly

recognized as old age or retirement benefits paid to

persons retired from service after reaching a specific

age or after a stated period of employment to the extent

that the distributions or payments, including investment

earnings, exceed previously taxed contributions. The term

with respect to these benefits shall not mean or include

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the following:

(A) Benefits paid under 42 U.S.C. Ch. 7

(relating to Social Security).

(B) A pension that is provided in lieu of old

age and survivor benefit payments under t 42 U.S.C.

Ch. 7 to a person whose employment was not covered

under 42 U.S.C. Ch. 7. The total amount of a Social

Security substitute pension may not exceed the

maximum Federal old age and survivor benefit

payments, less any Federal old age and survivor

benefit payments received under 42 U.S.C. Ch. 7 for

employment covered under 42 U.S.C. Ch. 7.

survivor's benefit payments paid to individuals by

the United States with respect to service in the

Armed Forces of the United States.

(D) Distributions from a pension plan of an

employee of money contributed by the employee, but if

the employee cannot determine the basis of the money

contributed to the pension plan, 15% of the amount of

the distributions shall be deemed compensation.

(3) The term shall not include any of the following:

(i) Periodic payments for sickness and disability

other than regular wages received during a period of

sickness or disability.

(ii) Disability, retirement or other payments

arising under worker's compensation acts, occupational

disease acts and similar legislation by a government.

(iii) (Reserved).

(iii.1) Beginning after December 31, 2029,

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contributions made to a plan commonly recognized as an

old age or retirement benefit plan paid to persons

retired from service after reaching a specific age or

after a stated period of employment.

(iv) Payments commonly known as public assistance or

unemployment compensation payments by a governmental

agency.

(v) Payments to reimburse actual expenses.

(vi) Payments made by employers or labor unions,

including payments made under a cafeteria plan qualifying

under section 125 of the Internal Revenue Code of 1986,

for employee benefit programs covering hospitalization,

sickness, disability or death, supplemental unemployment

benefits or strike benefits if the program does not

discriminate in favor of highly compensated individuals

as to eligibility to participate, payments or program

benefits.

(vii) Compensation received by a member of the armed

forces of the United States serving in a combat zone.

(viii) Payments received by a foster parent for in-

home care of foster children from an agency or political

subdivision of the Commonwealth or an organization exempt

from Federal tax under section 501(c)(3) of the Internal

Revenue Code of 1954 which is licensed by the

Commonwealth or a political subdivision as a placement

agency.

(ix) Payments made by employers or labor unions for

employee benefit programs covering Social Security or

retirement.

(x) Personal use of an employer's owned or leased

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property or employer-provided services.

"Corporate item." An item, including income, gain or loss,

deduction or credit, determined at the Pennsylvania S

corporation level, which is required to be taken into account

for a Pennsylvania S corporation's taxable year.

"Corporation." For purposes of applying the provisions of

section 2203(a) (relating to classes of income) with respect to

a "reorganization" as defined in that section, the term shall

include any of the following:

(1) A business trust to which 15 Pa.C.S. Ch. 95

(relating to business trusts) applies.

(2) A common law business trust.

(3) A limited liability company that, for Federal income

tax purposes, is taxable as a corporation or an investment

company.

"Dependent." A child who is the dependent of a claimant for

purposes of section 151 of the Internal Revenue Code of 1986.

"Dividends." As follows:

(1) A distribution in cash or property made by a

corporation, association, business trust or investment

company with respect to the corporation's, association's,

business trust's or investment company's stock out of

accumulated earnings and profits or out of earnings and

profits of the year in which the dividend is paid.

(2) The term shall not include any of the following:

(i) A distribution of the stock of a corporation

made by the corporation originally issuing the stock to

its stockholders if the distribution is not treated as

personal income for Federal individual income tax

purposes.

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(ii) For taxable years beginning on or after January

1, 1993, a distribution made by an investment company out

of earnings and profits derived from interest that is

statutorily free from State and local taxation under

Article XXIX of the Tax Reform Code of 1971 or the laws

of the United States.

"Employee." An individual from whose wages an employer is

required under the Internal Revenue Code of 1986 to withhold

Federal income tax.

"Employer." An individual, partnership, association,

corporation, governmental body or agency or other entity that is

required under the Internal Revenue Code of 1986 to withhold

Federal income tax from wages paid to an employee.

"Fiduciary." A guardian, trustee, executor, administrator,

receiver, conservator or person acting in a trust or similar

capacity, whether domiciliary or ancillary.

"Health savings account." As defined in section 223(d) of

the Internal Revenue Code of 1986, as amended.

"Income." For a resident individual, estate or trust, the

term shall mean the same as compensation, net profits, gains,

dividends, interest or income under section 2203.

"Income from sources within this Commonwealth." As follows:

(1) For a nonresident individual, estate or trust, the

term shall mean the same as compensation, net profits, gains,

dividends, interest or income under section 2203 to the

extent that the income is earned, received or acquired from

sources within this Commonwealth:

(i) by reason of ownership or disposition of an

interest in real or tangible personal property in this

Commonwealth;

20250HB1649PN2003 - 192 -

(ii) in connection with a trade, profession,

occupation carried on in this Commonwealth or for the

rendition of personal services performed in this

Commonwealth;

(iii) as a distributive share of the income of an

unincorporated business, Pennsylvania S corporation,

profession, enterprise, undertaking or other activity as

the result of work done, services rendered or other

business activities conducted in this Commonwealth,

except as allocated to another state under regulations

promulgated by the department under this subpart;

(iv) from intangible personal property employed in a

trade, profession, occupation or business carried on in

this Commonwealth; or

(v) as gambling and lottery winnings by reason of a

wager placed in this Commonwealth, the conduct of a game

of chance or other gambling activity located in this

Commonwealth or the redemption of a lottery prize from a

lottery conducted in this Commonwealth, other than

noncash prizes of the Pennsylvania State Lottery.

(2) For a nonresident individual, estate or trust, the

term shall not include items of income specified in paragraph

(1) received or acquired from an investment company

registered with the Securities and Exchange Commission under

15 U.S.C. Ch. 2D Subch. I (relating to investment companies).

"Individual." As follows:

(1) A natural person.

(2) The term shall include a member of a partnership or

association and a shareholder of a Pennsylvania S

corporation.

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"Installment sales method of reporting." As follows:

(1) The method by which a taxpayer reports the gain upon

the sale of tangible personal property or real property when

at least one payment is to be received in a taxable year

following the taxable year of sale, whether the property is

sold or otherwise disposed of in an isolated transaction or

from the inventory of a dealer or broker.

(2) Taxpayers may elect to allocate the gain upon the

transactions in equal proportion to each payment to be

received. Taxpayers who do not elect to allocate the gain

upon the transactions in equal proportion to each payment

received shall report all gains upon the sale in the taxable

year in which the transaction occurred.

(3) For the purposes of this definition:

(i) The gain upon the transaction shall be the

difference between the sales price and the seller's basis

in the property.

(ii) The sales price shall be the face amount of the

evidence of indebtedness given in exchange for the

property sold or otherwise disposed of together with the

value of other consideration received by the seller. If

the evidence of indebtedness fails to state a price, the

evidence of indebtedness shall be valued at the fair

market value of the property sold, less the value of

other property or cash received in the same transaction.

(iii) The installment sales method of reporting

shall not be used for transactions made to lend money or

render services.

"Internal Revenue Code of 1986." The Internal Revenue Code

of 1986, as amended to January 1, 1997, unless the reference

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contains the phrase "as amended" and refers to no other date, in

which case the reference shall be to the Internal Revenue Code

of 1986 as it exists as of the time of application of this

subpart.

"Investment company." An incorporated or unincorporated

enterprise registered with the Securities and Exchange

Commission under the Investment Company Act of 1940 (54 Stat.

789, 15 U.S.C. § 80a-1 et seq.).

"Nonresident estate or trust." An estate or trust which is

not a resident estate or trust. The term shall not include a

charitable trust or pension or profit sharing trust.

"Nonresident individual." An individual who is not a

resident of this Commonwealth.

"Partnership." A domestic or foreign general partnership,

joint venture, limited partnership, limited liability company,

business trust or other unincorporated entity that for Federal

income tax purposes is classified as a partnership.

"Partnership item." An item, including income, gain or loss,

deduction or credit determined at the partnership level, which

is required to be taken into account for a partnership's taxable

year.

"Pennsylvania S corporation." As follows:

(1) A small corporation that does not have a valid

election under section 2231 (relating to election by small

corporation) in effect.

(2) A qualified Subchapter S subsidiary owned by a

Pennsylvania S corporation shall be treated as a Pennsylvania

S corporation without regard to whether an election under

section 2231 has been made with respect to the subsidiary.

"Person." An individual, employer, association, fiduciary,

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partnership, corporation or other entity, estate or trust,

resident or nonresident. For the purpose of determining

eligibility for special tax provisions, the term shall mean an

individual.

"Poverty." An economic condition where the total amount of

poverty income is insufficient to adequately provide a claimant,

the claimant's spouse and dependent children with the

necessities of life.

"Poverty income." For the purpose of determining eligibility

for special tax provisions, all money or property, including

interest, gains or income derived from obligations which are

statutorily free from State or local taxation under the laws of

the United States or this Commonwealth, received of any nature

and from any source, but not including any of the following:

(1) Periodic payments for sickness and disability other

than regular wages received during a period of sickness or

disability.

(2) Disability, retirement or other payments arising

under workers' compensation acts, occupational disease acts

and similar legislation by a government.

(3) Payments commonly recognized as old age or

retirement benefits that are excluded under paragraph (2)(ii)

of the definition of "compensation" under this section.

(4) Payments commonly known as public assistance, or

unemployment compensation payments by a governmental agency.

(5) Payments to reimburse actual expenses.

(6) Payments made by employers or labor unions for

programs covering hospitalization, sickness, disability or

death, supplemental unemployment benefits, strike benefits,

Social Security and retirement.

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(7) Compensation received by a member of the armed

forces of the United States serving in a combat zone.

"Publicly traded partnership." An entity defined under

section 7704 of the Internal Revenue Code of 1986 with equity

securities registered with the Securities and Exchange

Commission under 15 U.S.C. § 781 (relating to registration

requirements for securities).

"Qualified student loan." As follows:

(1) Indebtedness incurred by a taxpayer to pay

educational expenses, which are:

(i) Incurred on behalf of the taxpayer at the time

the indebtedness is incurred.

(ii) Paid or incurred within a reasonable period of

time before or after the indebtedness is incurred.

(iii) Attributable to education furnished during a

period in which the recipient is a student.

(2) The term includes indebtedness used to refinance

indebtedness that qualifies as a qualified student loan.

(3) The term does not include indebtedness owed by a

taxpayer to a person related to the taxpayer.

"Qualified Subchapter S subsidiary." A domestic or foreign

corporation which, for Federal income tax purposes, is treated

as a qualified Subchapter S subsidiary as defined in section

1361(b)(3)(B) of the Internal Revenue Code of 1986, as amended

to January 1, 2005.

"Received." For the purpose of computation of income subject

to tax under this subpart, the term shall mean "received, earned

or acquired," and the phrase "received, earned or acquired"

shall be construed according to the method of accounting

required by the department under this subpart for computing and

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reporting income subject to the tax.

"Resident estate." The estate of a decedent who, at the time

of the decedent's death, was a resident individual.

"Resident individual." An individual who:

(1) is domiciled in this Commonwealth, unless the

individual maintains no permanent place of abode in this

Commonwealth, maintains a permanent place of abode elsewhere

and spends in the aggregate not more than 30 days of the

taxable year in this Commonwealth; or

(2) is not domiciled in this Commonwealth but maintains

a permanent place of abode in this Commonwealth and spends in

the aggregate more than 183 days of the taxable year in this

Commonwealth.

"Resident trust." Any of the following:

(1) A trust created by the will of a decedent who, at

the time of the decedent's death, was a resident individual.

(2) A trust created by, or consisting in whole or in

part of property transferred to a trust by a person who at

the time of the creation or transfer was a resident. The term

under this paragraph shall not include a charitable trust or

pension or profit-sharing trust.

"Small corporation." A corporation that has a valid election

in effect under Subchapter S of Chapter 1 of the Internal

Revenue Code of 1986, as amended to January 1, 2005.

"Social Security substitute pension." A pension that is

provided in lieu of old age and survivor benefit payments under

42 U.S.C. Ch. 7 (relating to Social Security) to a person whose

employment was not covered under the Social Security Act.

"Special tax provisions." A refund or forgiveness of all or

part of a claimant's liability under the provisions of this

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subpart.

"State." Except as provided under section 2303(a) (relating

to income taxes imposed by other states), a state or

commonwealth of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, a territory or possession of the

United States or a foreign country.

"Student loan interest." Interest paid during the taxable

year on a qualified student loan, including required and

voluntary interest payments, to attend a college, university,

vocational school or other postsecondary educational institution

eligible to participate in a student aid program administered by

the United States Department of Education.

"Tax." Includes interest, penalties, additions to tax and

the tax required to be withheld by an employer on compensation

paid, unless a more limited meaning is disclosed by the context.

"Taxable year." Any of the following:

(1) The taxable period on the basis of which a taxpayer

or claimant is required to file a Federal income tax return

under the Internal Revenue Code of 1986.

(2) If a taxpayer or claimant is not required to or does

not file a Federal income tax return, the calendar year. The

following shall apply:

(i) For the initial period during which the tax is

first imposed, the term shall mean the period beginning

June 1, 1971, and ending with the taxable period on the

basis of which a taxpayer or claimant is required to file

the taxpayer's Federal income tax return under the

Internal Revenue Code of 1986.

(ii) If the taxpayer or claimant is not required to

or does not file a Federal income tax return, December

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31, 1971.

"Taxpayer." As follows:

(1) An individual, estate or trust subject to the tax

imposed by this subpart.

(2) A partnership having a partner who is a taxpayer

under this title.

(3) A Pennsylvania S corporation having a shareholder

who is a taxpayer under this subpart and a person required to

withhold tax under this subpart.

CHAPTER 22

TAXATION GENERALLY

Subchapter

A. Imposition of Tax

B. Estates and Trusts

C. Partnerships

D. Pennsylvania S Corporations

E. Other Entities

F. Nonresident Individuals

SUBCHAPTER A

IMPOSITION OF TAX

Sec.

2201. Imposition of tax.

2202. Rate changes occurring during taxable year.

2203. Classes of income.

2204. Special tax provisions for poverty.

2205. Alternative special tax provision for poverty study.

2206. Pennsylvania ABLE Savings Program tax exemption.

§ 2201. Imposition of tax.

(a) Resident taxation.--Except as provided in subsection

(c), each resident individual, estate or trust shall be subject

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to, and shall pay for the privilege of receiving each of the

classes of income enumerated in section 2203 (relating to

classes of income), a tax upon each dollar of income received by

the resident during the resident's taxable year at the rate of

3.07%.

(b) Nonresident taxation.--Except as provided in subsection

(c), each nonresident individual, estate or trust shall be

subject to, and shall pay for the privilege of receiving each of

the classes of income enumerated in section 2203 from sources

within this Commonwealth, a tax upon each dollar of income

received by the nonresident during the nonresident's taxable

year at the rate of 3.07%.

2203 (relating to classes of income) received by a resident

trust, and the classes of income received by a nonresident trust

from sources within this Commonwealth, shall be taxable to the

grantor of the trust or another person to the extent the grantor

or other person is treated as the owner of the trust under

sections 671, 672, 673, 674, 675, 676, 677, 678 and 679 of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1

et seq.), as amended, whether or not the income is distributed

or distributable to the beneficiaries of the trust or

accumulated.

§ 2202. Rate changes occurring during taxable year.

Notwithstanding the provisions of section 2201 (relating to

imposition of tax), the tax rate used for the computation of tax

for a taxable year where the rate changes during the taxable

year shall be the monthly weighted average of the rates

applicable during the taxable year, regardless of when during

the taxable year the income is received.

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§ 2203. Classes of income.

(a) Classes of income specified.--The classes of income are

as follows:

(1) Compensation, which shall be defined as salaries,

wages, commissions, bonuses and incentive payments, whether

based on profits or otherwise, fees, tips and similar

remuneration received for services rendered, whether directly

or through an agent and whether in cash or in property,

except income derived from the United States Government for

active duty outside this Commonwealth as a member of the

armed forces of the United States and income from the United

States Government or the Commonwealth for active State duty

for emergency within or outside this Commonwealth, including

duty ordered under 35 Pa.C.S. Ch. 76 (relating to Emergency

Management Assistance Compact). The following shall apply:

(i) Compensation of a cash-basis taxpayer shall be

considered received if the compensation is actually or

constructively received for Federal income tax purposes

consistent with United States Treasury regulations and

rulings under the Internal Revenue Code of 1986, as

amended, except that, for purposes of computing tax under

this subpart:

(A) Amounts lawfully deducted, not deferred, and

withheld from the compensation of employees shall be

considered received by the employee as compensation

at the time the deduction is made.

(B) Contributions to an employees' trust, pooled

fund or other arrangement which is not subject to the

claims of creditors of the employer made by an

employer on behalf of an employee or self-employed

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individual at the election of the employee or self-

employed individual under a cash or deferred

arrangement or salary reduction agreement shall be

deemed received by the employee or individual as

compensation at the time the contribution is made,

regardless of when the election is made or a payment

is received.

attributable to a self-employed person shall be

deemed received at the time the contribution is made.

(D) Employer contributions to a Roth IRA

custodial account or employee annuity shall be deemed

received, earned or acquired only when distributed,

when the plan fails to meet the requirements of

section 408A of the Internal Revenue Code of 1986, as

amended, or when the plan is not operated in

accordance with the requirements of section 408A of

the Internal Revenue Code of 1986, as amended.

(E) Employee contributions to an employees'

trust, pooled fund, custodial account or contract or

employee annuity may not be deducted or excluded from

compensation.

(F) This subparagraph shall not apply to

compensation excluded under paragraph (3)(iii.1) of

the definition of "compensation" in section 2102

(relating to definitions).

(ii) For purposes of determining when deferred

compensation of employees other than employees of exempt

organizations and State and local governments is required

to be included in income, the rules of sections 83, 451

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and 409A of the Internal Revenue Code of 1986, as

amended, shall apply.

(iii) For purposes of determining when deferred

compensation of employees of exempt organizations and

State and local governments is required to be included in

income, the rules of sections 83, 451, 457 and 409A of

the Internal Revenue Code of 1986, as amended, shall

apply.

(2) Net profits, which shall be defined as the net

income from the operation of a business, profession or other

activity, after provision for all costs and expenses incurred

in the conduct of the business, profession or other activity,

determined either on a cash or accrual basis in accordance

with accepted accounting principles and practices but without

deduction of taxes based on income. For purposes of

calculating net income under this paragraph, to the extent a

taxpayer properly deducts an amount under section 195(b)(1)

(A) of the Internal Revenue Code of 1986, as amended, and the

regulations promulgated under section 195(b)(1)(A) of the

Internal Revenue Code of 1986, as amended, the taxpayer shall

be permitted a deduction in equal amount in the same taxable

year.

(3) Net gains or income from disposition of property as

follows:

(i) The term shall be defined as net gains or net

income, less net losses, derived from the sale, exchange

or other disposition of property, including real

property, tangible personal property, intangible personal

property or obligations issued on or after the effective

date of this paragraph by any of the following:

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(A) The Commonwealth.

(B) A public authority, commission, board or

other agency created by the Commonwealth.

or a public authority created by a political

subdivision.

(D) The Federal Government as determined in

accordance with accepted accounting principles and

practices.

(ii) For the purpose of this subpart:

(A) For the determination of the basis of any

property, real and personal, if acquired prior to

June 1, 1971, the date of acquisition shall be

adjusted to June 1, 1971, as if the property had been

acquired on that date. If the property was acquired

after June 1, 1971, the actual date of acquisition

shall be used in determination of the basis.

(B) The terms "net gains or income" and "net

losses" shall not include gains or income or loss

derived from obligations which are statutorily free

from State or local taxation under Article XXIX of

the Tax Reform Code of 1971 or the laws of the United

States.

(iii) For the purpose of this subpart, the term

"sale, exchange or other disposition" shall not include

the exchange of stock or securities in a corporation that

is a party to a reorganization in pursuance of a plan of

reorganization, solely for stock or securities in the

corporation or in another corporation that is a party to

the reorganization and the transfer of property to a

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corporation by one or more persons solely in exchange for

stock or securities in the corporation if, immediately

after the exchange, the person or persons are in control

of the corporation. The following shall apply:

(A) For purposes of this subparagraph, stock or

securities issued for services shall not be

considered as issued in return for property.

(B) For purposes of this subparagraph, the term

"reorganization" shall mean any of the following:

(I) A statutory merger or consolidation.

(II) The acquisition by one corporation in

exchange solely for all or a part of its voting

stock, or in exchange solely for all or a part of

the voting stock of a corporation which is in

control of the acquiring corporation, of stock of

another corporation if, immediately after the

acquisition, the acquiring corporation has

control of the other corporation, whether or not

the acquiring corporation had control immediately

before the acquisition.

(III) The acquisition by one corporation, in

exchange solely for all or a part of its voting

stock, or in exchange solely for all or a part of

the voting stock of a corporation which is in

control of the acquiring corporation, of

substantially all of the properties of another

corporation. In determining whether the exchange

is solely for stock, the assumption by the

acquiring corporation of a liability of the other

or the fact that property acquired is subject to

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a liability shall be disregarded.

(IV) A transfer by a corporation of all or a

part of its assets to another corporation if,

immediately after the transfer, the transferor,

or one or more of the transferor's shareholders,

including persons who were shareholders

immediately before the transfer, or any

combination thereof, is in control of the

corporation to which the assets are transferred.

(V) A recapitalization.

(VI) A mere change in identity, form or

place of organization.

exchange for stock of a corporation, referred to in

this clause as a "controlling corporation," which is

in control of the acquiring corporation, of

substantially all of the properties of another

corporation which in the transaction is merged into

the acquiring corporation shall not disqualify a

transaction under clause (B)(I) if the transaction

would have qualified under clause (B)(I) if the

merger had been into the controlling corporation and

no stock of the acquiring corporation is used in the

transaction.

(D) A transaction otherwise qualifying under

clause (B)(I) shall not be disqualified by reason of

the fact that stock of a corporation, referred to in

this clause as a "controlling corporation," which,

before the merger, was in control of the merged

corporation is used in the transaction if, after the

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transaction, the corporation surviving the merger

holds substantially all of its properties and of the

properties of the merged corporation, other than

stock of the controlling corporation distributed in

the transaction, and, in the transaction, former

shareholders of the surviving corporation exchanged,

for an amount of voting stock of the controlling

corporation, an amount of stock in the surviving

corporation which constitutes control of the

corporation.

(E) For purposes of this subparagraph:

(I) The term "control" shall mean the

ownership of stock possessing at least 80% of the

total combined voting power of all classes of

stock entitled to vote and at least 80% of the

total number of shares of all other classes of

stock of the corporation.

(II) The term "a party to a reorganization"

shall include a corporation resulting from a

reorganization, and both corporations, in the

case of a reorganization resulting from the

acquisition by one corporation of stock or

properties of another. In the case of a

reorganization qualifying under clause (B)(I) by

reason of clause (C), the term "a party to a

reorganization" shall include the controlling

corporation referred to in clause (C).

(F) Notwithstanding any other provisions of this

subparagraph, upon every exchange or conversion, the

taxpayer's base for the stock or securities received

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shall be the same as the taxpayer's actual or

attributed base for the stock, securities or property

surrendered in exchange for the stock or securities

received.

(iv) For the purpose of this subpart, the term

"sale, exchange or other disposition" shall not include

any of the following:

(A) A transfer by a common trust fund described

in section 584 of the Internal Revenue Code of 1986

of all or substantially all of its assets to one or

more companies described in section 851 of the

Internal Revenue Code of 1986 in exchange for stock

or units of beneficial interest in the company or

companies to which the assets are transferred and the

distribution of the stock or units by the fund to its

participants in exchange for the participants'

interest in the fund, if no gain or loss is

recognized on the transfer or distribution for

Federal income tax purposes. Upon each exchange, the

taxpayer's base for the assets, stock or units

received shall be the same as the taxpayer's actual

or attributed base for the assets, stock, units or

interest surrendered in exchange for the assets,

stock or units.

(B) A transfer of an interest in an enterprise

treated as a partnership for purposes of this subpart

in exchange for an interest in another enterprise

treated as a partnership for purposes of this

subpart, a liquidation made in connection with a

transfer or an exchange made under a statutory

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merger, consolidation or division of enterprises so

treated unless taxable income or gain is recognized

for Federal income tax purposes. Upon each exchange,

the taxpayer's base for the interest received shall

be the same as the taxpayer's actual or attributed

base for the interest surrendered in exchange.

(v) For the purpose of this subpart, the term "net

gains or net income, less net losses," shall not include

a gain or loss from the sale, exchange or other

disposition of the taxpayer's principal residence. The

following shall apply:

(A) For purposes of this subparagraph, the term

"principal residence" shall mean the property that

has been owned and used by the taxpayer as the

taxpayer's principal residence for periods

aggregating two years or more during the five-year

period ending on the date of the sale, exchange or

disposition. The following apply:

(I) In the case of property only a portion

of which, during the five-year period ending on

the date of the sale, exchange or disposition,

has been owned or used by the taxpayer as the

taxpayer's principal residence for periods

aggregating two years or more, this subparagraph

shall apply with respect to the portion of the

gain from the sale, exchange or disposition of

the property as determined under regulations

prescribed by the department to be attributable

to that portion.

(II) In the case of a principal residence a

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portion of which has never been subject to the

allowance for depreciation, this subparagraph

shall apply with respect to the portion of the

gain from the sale, exchange or disposition of

the property as is determined under regulations

prescribed by the department to be attributable

to that portion.

(B) The provisions of this subparagraph shall

not apply to a sale, exchange or disposition if,

during the two-year period ending upon the date of

the sale, exchange or disposition, there was a prior

sale, exchange or disposition by the taxpayer of a

principal residence unless the sale, exchange or

disposition is by reason of a change in employment,

health or, to the extent provided in regulations,

unforeseen circumstances.

sale, exchange or disposition made prior to January

1, 1998.

(vi) For purposes of this subpart, the term "net

gains or income" and "net losses" shall not include gains

or income or losses which are excluded from Federal

taxation under section 1400Z-2 of the Internal Revenue

Code of 1986, as amended. Net gains or net income, less

net losses, which are excluded under this subparagraph

shall be included in income to the extent they are

included in gross income under section 1400Z-2(b) of the

Internal Revenue Code of 1986, as amended. Section 1400Z-

2(c) of the Internal Revenue Code of 1986, as amended,

shall apply in the computation of net gains or net income

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and net losses.

(4) Net gains or income derived from or in the form of

rents, royalties, patents and copyrights.

(5) Dividends. The term "dividends" shall not include

gains or income or losses which are excluded from Federal

taxation under section 1400Z-2 of the Internal Revenue Code

of 1986, as amended. Gains or income or losses which are

excluded under this paragraph shall be included in income to

the extent they are included in gross income under section

1400Z-2(b) of the Internal Revenue Code of 1986, as amended.

Section 1400Z-2(c) of the Internal Revenue Code of 1986, as

amended, shall apply in the computation of net gains or net

income and net losses.

(6) Interest derived from obligations which are not

statutorily free from State or local taxation under the laws

of the United States or this Commonwealth, an amount paid

under contract of life insurance or endowment or annuity

contract which is includable in gross income for Federal

income tax purposes and an amount paid out of the Archer

Medical Savings Account (Archer MSA) or health savings

account that is includable in the gross income of an account

beneficiary for Federal income tax purposes.

(7) Gambling and lottery winnings other than noncash

prizes of the Pennsylvania State Lottery.

(8) Net gains or income derived through estates or

trusts. To the extent that income or gain is subject to tax

under one of the classes of income enumerated in this

section, the income or gain shall not be subject to tax under

another class.

(b) Computation of income.--Income shall be computed under

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the method of accounting on the basis of which the taxpayer

regularly computes income in keeping the taxpayer's books. If

the department determines that no method has been regularly used

or the method used does not clearly reflect income, the

computation of income shall be made under a method which, in the

opinion of the department, clearly reflects income.

(1) In computing income, a depreciation deduction shall

be allowed for the exhaustion, wear and tear and obsolescence

of property being employed in the operation of a business or

held for the production of income.

(2) Except as provided in paragraph (3), the deduction

must be reasonable and shall be computed in accordance with

the property's adjusted basis at the time placed in service,

reasonably estimated useful life and net salvage value at the

end of the property's reasonably estimated useful economic

life under the straight-line method or other method

prescribed by the department.

(3) A taxpayer may use any depreciation method, recovery

method or convention that is also used by the taxpayer in

determining Federal net taxable income if, when placed in

service, the property has the same adjusted basis for Federal

income tax purposes and the method or convention is allowable

for Federal income tax purposes at the time the property is

placed in service or under the Internal Revenue Code of 1986,

whichever is earlier.

(4) The basis of property shall be reduced, but not

below zero, for depreciation by the greater of the following:

(i) The amount deducted on a return and not

disallowed, but only to the extent the deduction results

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in a reduction of income.

(ii) The amount allowable using the straight-line

method of depreciation computed on the basis of the

property's adjusted basis at the time placed in service,

reasonably estimated useful life and net salvage value at

the end of the property's reasonably estimated useful

economic life, regardless of whether the deduction

results in a reduction of income.

(d) Section 179 Property.--The cost of property commonly

referred to as Section 179 Property may be treated as a

deductible expense only to the extent allowable under the

version of section 179 of the Internal Revenue Code in effect at

the time the property is placed in service or under section 179

of the Internal Revenue Code of 1986, whichever is earlier. The

basis of Section 179 Property shall be reduced, but not below

zero, for costs treated as a deductible expense. The amount of

the reduction shall be the amount deducted on a return and not

disallowed, regardless of whether the deduction results in a

reduction of income.

(e) Federal limitations.--This subpart shall be subject to

applicable Federal limitations on State income taxation.

(f) Applicability of Internal Revenue Code of 1986.--

(1) The requirements of sections 1031 and 1035 of the

Internal Revenue Code of 1986, as amended, shall be

applicable.

(2) Except as provided in this subpart and without

regard to sections 220(f)(4) and 223(f)(4) of the Internal

Revenue Code of 1986, the requirements of sections 106(b) and

(d), 220 and 223 of the Internal Revenue Code of 1986 shall

be applicable.

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(3) The provisions of section 1033 of the Internal

Revenue Code of 1986, as amended, shall be applicable.

(4) The provisions of section 451(f) of the Internal

Revenue Code of 1986, as amended, shall be applicable.

(g) Qualified tuition programs.--

(1) An amount paid as a contribution to a qualified

tuition program shall be deductible from taxable income on

the annual personal income tax return. The amount paid as a

contribution to a qualified tuition program allowable as a

deduction under this subsection shall be subject to an annual

limitation not to exceed the threshold for exclusion from

gifts as provided in section 2503(b) of the Internal Revenue

Code of 1986, as amended, per designated beneficiary. The

deduction shall not result in taxable income being less than

zero.

(2) (i) The following shall not be subject to tax under

this subpart:

(A) An amount distributed from a qualified

tuition program that is excludable from tax under

section 529(c)(3)(B) of the Internal Revenue Code of

1986, as amended.

(B) A rollover that is excludable from tax under

section 529(c)(3)(C) of the Internal Revenue Code of

1986, as amended.

tuition program.

(D) The value of a medal awarded by or prize

money received from the United States Olympic

Committee on account of competition in the Olympic

Games or Paralympic Games.

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(E) An amount received by an employee through an

employer's matching contribution to an account as

defined under Article XIX-J of the Tax Reform Code of

1971.

(ii) A change in designated beneficiaries under

section 529(c)(3)(C) of the Internal Revenue Code of

1986, as amended, shall not constitute a taxable event

under this subpart.

(3) An amount distributed from a qualified tuition

program that is not described under paragraph (2) shall be

taxable under this subpart.

(4) For purposes of this subsection:

(i) The term "designated beneficiary" shall have the

same meaning as provided in section 529(e)(1) of the

Internal Revenue Code of 1986, as amended.

(ii) The term "qualified tuition program" shall have

the same meaning as provided in section 529(b)(1) of the

Internal Revenue Code of 1986, as amended.

(5) As follows:

(i) The classes of income under this section shall

not include an amount which is excluded from Federal

gross income under sections 276 and 278(a) of the COVID-

Related Tax Relief Act of 2020, enacted as Subtitle B of

Title II of Division N of the Consolidated Appropriations

Act, 2021 (Public Law 116-260, 134 Stat. 1182).

(ii) No deduction may be disallowed from an expense

that is otherwise deductible if the payment of the

expense results in forgiveness of a covered loan under

subparagraph (i).

(6) The classes of income under this section shall not

20250HB1649PN2003 - 216 -

include a payment received by an individual from the United

States under section 2201 of the Coronavirus Aid, Relief, and

Economic Security Act (Public Law 116-136, 134 Stat. 281) or

sections 272 and 273 of the Consolidated Appropriations Act,

2021.

(7) An amount received from the Federal or State

government or Norfolk Southern Railway, or an agent thereof,

as a result of the train derailment that occurred in East

Palestine, Ohio, on February 3, 2023, shall not be considered

income subject to the tax imposed by this subpart.

(h) Drilling and development costs.--

(1) Except as provided in paragraph (2), a person who

incurs intangible drilling and development costs as defined

in section 263(c) of the Internal Revenue Code of 1986, as

amended, and regulations under the Internal Revenue Code of

1986, as amended, shall capitalize the costs and recover them

over a 10-year period in the taxable year the costs are

incurred.

(2) A person may elect to currently expense up to one-

third of the costs in the taxable year in which the costs are

incurred and recover the remaining costs over a 10-year

period beginning in the taxable year the costs are incurred.

(i) Unconstitutional classes severable.--If one or more or

part of one or more classes of income under subsection (a) are

held to be unconstitutional by a final decision of a court of

last resort, the unconstitutional class or classes or part of a

class or classes of income shall be deemed severable, and the

tax imposed by this subpart shall apply with respect to all the

remaining classes of income or parts of classes of income

enumerated in subsection (a) as if the unconstitutional class or

20250HB1649PN2003 - 217 -

classes of income or part or parts of classes of income had not

been included in this subpart.

(j) Student loan interest.--The amount of student loan

interest paid during a taxable year by a resident individual

shall be deductible from taxable income on the annual personal

income tax return, provided that the deduction may not:

(1) exceed $2,500 per taxable year; and

(2) result in taxable income being less than zero.

(k) Depletion of natural deposit.--A person may claim a

deduction for depletion of a mine, oil and gas well and other

natural deposit in accordance with the provisions of sections

611, 612, 613, 613A, 614, 616 and 617 of the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 611 et seq.) in

effect on the effective date of this subsection.

§ 2204. Special tax provisions for poverty.

(a) Intent.--The General Assembly, in recognition of the

powers contained in section 2(b)(ii) of Article VIII of the

Constitution of Pennsylvania which provides for the

establishment as a class or classes of subjects of taxation the

property or privileges of persons who, because of poverty, are

determined to be in need of special tax provisions, declares as

its legislative intent and purpose to establish special tax

provisions as provided in this subpart.

(b) Public policy determination.--The General Assembly,

having determined that there are individuals in this

Commonwealth whose incomes are at a level that imposition of a

tax on those incomes would deprive the individuals and the

individuals' dependents of the bare necessities of life, and

having further determined that poverty is a relative concept

inextricably joined with actual income and the number of

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individuals dependent upon the income, deems it to be a matter

of public policy to provide special tax provisions for that

class of individuals designated to relieve the individuals'

economic burden.

thereafter, a claimant who meets the standards of eligibility

for poverty specified in this section shall be deemed a separate

class of subject of taxation and shall be entitled to the

benefit of the special provisions of this subpart.

(d) Determination of poverty.--A claim for special tax

provisions under this section shall be determined in accordance

with the following:

(1) If the poverty income of a claimant during an entire

taxable year is $6,500 or less, or, in the case of a married

claimant, if the joint poverty income of the claimant and the

claimant's spouse during an entire taxable year is $13,000 or

less, the claimant shall be entitled to a refund or

forgiveness of money which has been paid over to, or would

except for the provisions of this subpart be payable to, the

Commonwealth under this subpart, with an additional income

allowance of $9,500 for each dependent of the claimant. For

purposes of this subsection, a claimant shall not be

considered to be married if all of the following apply:

(i) The claimant and the claimant's spouse file

separate returns.

(ii) The claimant and the claimant's spouse lived

apart at all times during the last six months of the

taxable year or are separated pursuant to a written

separation agreement.

(2) If the poverty income of the claimant during an

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entire taxable year does not exceed the poverty income

limitations under paragraph (1) by more than the dollar

categories contained in this paragraph, the claimant shall be

entitled to a refund or forgiveness based on the percentage

prescribed in this paragraph of money which has been paid

over to, or would except for the provisions of this subpart

be payable to the Commonwealth under this subpart:

(i) Ninety percent if not more than $250.

(ii) Eighty percent if not more than $500.

(iii) Seventy percent if not more than $750.

(iv) Sixty percent if not more than $1,000.

(v) Fifty percent if not more than $1,250.

(vi) Forty percent if not more than $1,500.

(vii) Thirty percent if not more than $1,750.

(viii) Twenty percent if not more than $2,000.

(ix) Ten percent if not more than $2,250.

(3) If an individual has a taxable year of less than 12

months, the poverty income of the individual shall be

annualized in a manner as the department may prescribe.

§ 2205. Alternative special tax provision for poverty study.

(a) Study.--The General Assembly directs the Joint State

Government Commission to conduct or provide for a comprehensive

study to determine whether alternative forms of special tax

provisions for poverty would be more beneficial to persons who,

because of poverty, are determined to be in need of special tax

provisions.

(b) Comparison study.--The study shall include a comparison

between the special tax provisions for poverty specified under

section 2204 (relating to special tax provisions for poverty)

and the earned income credit allowable under section 32 of the

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Internal Revenue Code of 1986, as amended.

effects of linking the alternative special tax provisions for

poverty to Federal law, including misuse that may be inherent in

the Federal program.

(d) Fiscal costs.--The study shall ascertain any differences

between the fiscal costs to the Commonwealth of the special tax

provisions for poverty specified under section 2204 and

projected fiscal costs of other alternative provisions.

(e) Consultants.--The Joint State Government Commission may

hire or retain consultants, utilizing a request for proposal

procedure, as necessary to assist in the performance of its

duties under this section.

(f) Report.--The executive director of the Joint State

Government Commission shall present a report summarizing the

results of this study to the chairperson and minority

chairperson of the Finance Committee of the Senate and the

chairperson and minority chairperson of the Finance Committee of

the House of Representatives after August 1, 2009, and before

September 1, 2009.

§ 2206. Pennsylvania ABLE Savings Program tax exemption.

(a) Exempt amounts.--The following shall be exempt from all

taxation by the Commonwealth and its political subdivisions:

(1) Undistributed earnings on an account.

(2) An amount distributed from an account that is not

included in gross income under section 529A(c)(1) of the

Internal Revenue Code of 1986.

(b) Contributions.--

(1) An amount contributed to an account shall be

deductible from the taxable income of the contributor under

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this subpart for the tax year the contribution was made.

(2) The total contributions made by a contributor during

a taxable year to all accounts that are allowable as a

deduction under this section may not exceed the dollar amount

under section 2503(b) of the Internal Revenue Code of 1986.

(3) The deduction may not result in the contributor's

taxable income being less than zero.

(4) The department and the Treasury Department shall

cooperate in verifying account information relating to

contributions to an account itemized by a contributor and the

contributor's specific contributions.

account and not otherwise exempt from taxation under this

section shall be taxable income to the designated beneficiary

under this subpart.

(d) Change in beneficiaries.--A change in designated

beneficiaries under section 529A(c) of the Internal Revenue Code

of 1986 shall not constitute a taxable event.

(e) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Account." An ABLE savings account as defined in section 102

of the Pennsylvania ABLE Act.

"Contributor." An individual who makes a contribution to an

account as defined in section 102 of the Pennsylvania ABLE Act.

"Designated beneficiary." As defined in section 102 of the

Pennsylvania ABLE Act.

"Pennsylvania ABLE Act." The act of April 18, 2016 (P.L.128,

No.17), known as the Pennsylvania ABLE Act.

"Pennsylvania ABLE Savings Program." The program established

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under the Pennsylvania ABLE Act.

"Qualified disability expense." As defined in section 102 of

the Pennsylvania ABLE Act.

SUBCHAPTER B

ESTATES AND TRUSTS

Sec.

2211. Taxability of estates, trusts and their beneficiaries.

§ 2211. Taxability of estates, trusts and their beneficiaries.

(a) General rule.--Except as provided in subsection (b), the

income of a beneficiary of an estate or trust with respect to

the estate or trust shall consist of the part of the income or

gains received by the estate or trust for the estate's or

trust's taxable year ending within or with the beneficiary's

taxable year which, under the governing instrument and

applicable State law, is required to be distributed, paid or

credited to the beneficiary. The income or gains of the estate

or trust, if any, taxable to the estate or trust shall consist

of the income or gains received by the estate or trust which has

not been distributed or credited to the estate's or trust's

beneficiaries.

(b) Exception.--Subsection (a) shall not apply to the extent

the grantor or another person is taxable on the income of the

trust under section 2201(c) (relating to imposition of tax).

SUBCHAPTER C

PARTNERSHIPS

Sec.

2221. Taxability of partners.

2222. Tax treatment determined at partnership level.

2223. Tax imposed at partnership level.

§ 2221. Taxability of partners.

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Except as provided under section 2223 (relating to tax

imposed at partnership level), a partnership as an entity shall

not be subject to the tax imposed by this subpart, but the

income or gain of a member of a partnership with respect to the

partnership shall be subject to the tax, and the tax shall be

imposed on the member's share, whether or not distributed, of

the income or gain received by the partnership for the

partnership's taxable year ending within or with the member's

taxable year.

§ 2222. Tax treatment determined at partnership level.

The classification or character of a partnership item shall

be determined at the partnership level. This section shall not

prohibit the department from adjusting a partner's return.

§ 2223. Tax imposed at partnership level.

(a) Underreported income.--

(1) A partnership underreporting income by more than

$1,000,000 for a tax year shall be liable for the tax,

excluding interest, penalties or additions at the tax rate

applicable to the tax year, on the underreported income

without regard to the tax liability of the partners for the

underreported income.

(2) The department shall assess the partnership for the

tax on the underreported income.

(3) The department may not assess the partners for the

underreported income or the tax on the underreported income.

The partnership shall be required to provide an amended

statement to each partner as required under section 2707(c)

(3) (relating to requirements concerning returns, notices,

records and statements) of the partner's pro rata share of

the underreported income within 90 days of the assessment

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becoming final.

(4) Nothing in this subsection shall relieve the

partners of the partners' tax liability on the underreported

income.

(b) Credit.--Each partner shall be allowed a credit for the

partner's share of the tax assessed against the partnership

under subsection (a) and paid by the partnership. The credit

shall be allowed for the partner's taxable year in which the

underreported income was required to be reported.

following partnerships:

(1) A partnership that has 11 or more partners who are

natural persons.

(2) A partnership that has at least one partner which is

a corporation, limited liability company, partnership or

trust.

(3) A partnership that has only partners who are natural

persons and elects to be subject to this subsection. The

election must be included on the partnership return to be

filed with the department.

(d) Publicly traded partnership.--This section shall not

apply to a publicly traded partnership.

(e) Tax liability.--Nothing under this section shall require

one partner to be liable for the payment of a tax liability of

another partner.

(f) Appeals.--Appeals involving a deficiency assessed under

this section may only be pursued by the partnership. A

reassessment of tax liability shall be binding on the partners.

SUBCHAPTER D

PENNSYLVANIA S CORPORATIONS

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Sec.

2231. Election by small corporation.

2232. Manner of making election.

2233. Effective years of election.

2234. Revocation of election.

2235. Termination by corporation ceasing to be small

corporation.

2236. Termination year.

2237. Taxable year of Pennsylvania S corporation.

2238. Income of Pennsylvania S corporation.

2239. Income of Pennsylvania S corporations taxed to

shareholders.

2240. Limitation on pass-through of losses to shareholders.

2241. Adjustments to basis of stock of shareholders.

2242. Distributions.

§ 2231. Election by small corporation.

A small corporation may elect not to be taxed as a

Pennsylvania S corporation. The election requires the consent of

100% of the outstanding shares of the small corporation on the

day on which the election is made. A qualified Subchapter S

subsidiary owned by a Pennsylvania S corporation shall be

treated as a Pennsylvania S corporation whether or not an

election has been made with respect to the subsidiary.

§ 2232. Manner of making election.

(a) General rule.--An election made under section 2231

(relating to election by small corporation) shall be made in the

manner prescribed by the department.

(b) Election.--An election under section 2231 may be made

for any taxable year at any time during the preceding taxable

year or at any time on or before the due date or extended due

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date of the small corporation's tax return under Article IV of

the Tax Reform Code of 1971.

§ 2233. Effective years of election.

An election made under section 2231 (relating to election by

small corporation) shall be effective for the taxable year for

which the election is made and for each succeeding taxable year

unless revoked or terminated.

§ 2234. Revocation of election.

(a) Revocation of election.--An election under section 2231

(relating to election by small corporation) may be revoked if

shareholders holding more than one-half of the shares of stock

of the corporation consent to the revocation. The corporation

and a successor corporation shall not be eligible to revoke an

election under this section for a taxable year prior to the

corporation's fifth taxable year which begins after the first

taxable year for which an election is effective unless the

corporation becomes a qualified Subchapter S subsidiary.

(b) Effective date of revocation.--A revocation under

subsection (a) shall be effective on the first day of the

taxable year if made on or before the 15th day of the third

month of the taxable year. If the revocation is made after that

date, the revocation shall be effective for the following

taxable year.

§ 2235. Termination by corporation ceasing to be small

corporation.

(a) Termination of status.--If a corporation ceases to be a

small corporation, the corporation's status as a Pennsylvania S

corporation shall terminate.

(b) Effective date of termination.--The termination shall be

effective on the date on which the corporation ceases to be a

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small corporation.

§ 2236. Termination year.

(a) Termination year generally.--The portion of the

termination year of a Pennsylvania S corporation ending before

the first day the termination is effective shall be treated as a

short taxable year for which the corporation is a Pennsylvania S

corporation.

(b) Termination year as short taxable year.--The portion of

the year beginning on the first day the termination is effective

shall be treated as a short taxable year for purposes of the tax

imposed under Article IV of the Tax Reform Code of 1971.

expense items to be taken into consideration in each short year

shall be made in accordance with regulations as may be issued by

the department.

§ 2237. Taxable year of Pennsylvania S corporation.

The taxable year of a Pennsylvania S corporation shall be the

same taxable year that the corporation uses for Federal income

tax purposes.

§ 2238. Income of Pennsylvania S corporation.

(a) General rule.--A Pennsylvania S corporation shall not be

subject to the tax imposed under this subpart, except as

provided under subsection (f), but the shareholders of the

Pennsylvania S corporation shall be subject to the tax imposed

under this subpart.

(b) Imposed tax treated as loss.--If a tax is imposed on a

Pennsylvania S corporation or a qualified Subchapter S

subsidiary owned by a Pennsylvania S corporation under section

1374 of the Internal Revenue Code of 1986, as amended to January

1, 1997, or under Article IV or former Article VI of the Tax

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Reform Code of 1971 for a taxable year, for purposes of section

2239 (relating to income of Pennsylvania S corporations taxed to

shareholders), the amount of tax imposed shall be treated as a

loss sustained by the Pennsylvania S corporation during that

year. In the case of taxes imposed under section 1374 of the

Internal Revenue Code of 1986, as amended to January 1, 1997, or

Article VI of the Tax Reform Code of 1971, the character of the

loss shall be determined by allocating the loss proportionately

among the recognized built-in gains giving rise to the tax.

corporation makes a distribution of property, other than an

obligation of the corporation, with respect to the Pennsylvania

S corporation's stock and the fair market value of the property

exceeds the property's adjusted basis in the hands of the

corporation, gain shall be recognized on the distribution as if

the property had been sold to the distributee at its fair market

value.

(d) Computation of items.--An election which may affect the

computation of items derived from a Pennsylvania S corporation

shall be made by the corporation.

(e) Deduction.--A deduction, except a net loss deduction,

which was disallowed when a corporation was subject to the tax

imposed under Article IV of the Tax Reform Code of 1971 shall be

allowed in years in which the corporation is a Pennsylvania S

corporation to the same extent and in the same manner that the

deduction would have been allowed if the corporation had

remained subject to the tax imposed under Article IV of the Tax

Reform Code of 1971.

(f) Underreported income.--A Pennsylvania S corporation with

underreported income shall be subject to the following:

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(1) The following apply:

(i) A Pennsylvania S corporation underreporting

income by more than $1,000,000 for any tax year shall be

liable for the tax, excluding interest, penalties or

additions, at the tax rate applicable to the tax year, on

the underreported income without regard to the tax

liability of the shareholders for the underreported

income.

(ii) The department shall assess the Pennsylvania S

corporation for the tax on the underreported income. The

department shall not assess the shareholders for the

underreported income or the tax on the underreported

income. The Pennsylvania S corporation shall be required

to provide an amended statement to each shareholder as

required under section 2702 (relating to return of

Pennsylvania S corporation) of the shareholder's pro rata

share of the underreported income within 90 days of the

assessment becoming final.

(iii) Nothing in this subsection shall relieve the

shareholders of the shareholders' tax liability on the

underreported income.

(2) Each shareholder shall be allowed a credit for the

shareholder's share of the tax assessed against the

Pennsylvania S corporation under paragraph (1) and paid by

the Pennsylvania S corporation. The credit shall be allowed

for the shareholder's taxable year in which the underreported

income was required to be reported.

(3) Paragraph (1) shall apply to the following

Pennsylvania S corporations:

(i) A Pennsylvania S corporation which has 11 or

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more shareholders.

(ii) A Pennsylvania S corporation which elects to be

subject to this subsection. The election must be included

on the Pennsylvania S corporation return filed with the

department.

(4) Nothing in this section shall require one

shareholder to be liable for the payment of a tax liability

of another shareholder.

(5) Appeals involving the deficiency assessed under this

section may be filed only by the Pennsylvania S corporation.

A reassessment of tax liability shall be binding on the

shareholders.

§ 2239. Income of Pennsylvania S corporations taxed to

shareholders.

(a) Shareholder income or loss.--Each shareholder of a

Pennsylvania S corporation shall take into income the

shareholder's pro rata share of the income or loss in each

applicable class of income received by the corporation for its

taxable year ending within or with the shareholder's taxable

year.

(b) Calculation.--Each shareholder's pro rata share of an

item for any taxable year shall be the sum of the amounts

determined with respect to the shareholder by assigning an equal

portion of all items to each day of the taxable year and then

dividing that portion pro rata among the shares outstanding on

that day.

included in the shareholder's pro rata share shall be determined

as if the item were realized directly by the shareholder from

the source from which the item was realized by the corporation

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or incurred in the same manner as incurred by the corporation.

(d) Deduction.--With respect to a deduction allowed under

section 2238(e) (relating to income of Pennsylvania S

corporation), a nonresident shareholder shall be allowed the

deduction only to the extent that the previously disallowed

deduction would have been considered a deduction related to

income from sources within this Commonwealth, within the meaning

of section 2102 (relating to definitions), during the taxable

year when the deduction was disallowed.

(e) Subsidiary not separate corporation.--For the purposes

of this subpart, a qualified Subchapter S subsidiary owned by a

Pennsylvania S corporation shall not be treated as a separate

corporation. All assets, liabilities and items of income,

deduction and credit of the qualified Subchapter S subsidiary

shall be treated as assets, liabilities and items of income,

deduction and credit of the parent Pennsylvania S corporation.

§ 2240. Limitation on pass-through of losses to shareholders.

(a) Aggregate losses.--The aggregate amount of losses taken

into account by a shareholder of a Pennsylvania S corporation

under section 2239 (relating to income of Pennsylvania S

corporations taxed to shareholders) shall not exceed the sum of

the adjusted basis of the shareholder's stock in the

Pennsylvania S corporation, determined after applying section

2241(a) (relating to adjustments to basis of stock of

shareholders) for the taxable year and the shareholder's

adjusted basis of indebtedness of the Pennsylvania S corporation

to the shareholder, determined before applying section 2241(d)

for the taxable year.

(b) Carryover of losses prohibited.--There shall be no

carryover of losses by the shareholders of a Pennsylvania S

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corporation.

§ 2241. Adjustments to basis of stock of shareholders.

(a) Increase of basis.--The basis of the stock of a

shareholder in a Pennsylvania S corporation shall be increased

for any period by the shareholder's share of the corporation's

income, including nontaxable income, as determined under section

2239 (relating to income of Pennsylvania S corporations taxed to

shareholders).

(b) Decrease of basis.--The basis of a shareholder's stock

in a Pennsylvania S corporation shall be decreased for any

period, but not below zero, by a distribution by the corporation

to the shareholder which was not included in the income of the

shareholder under section 2242 (relating to distributions) and

by the shareholder's share of the corporation's losses as

determined under section 2239 to the extent that the loss

reduced the shareholder's income subject to the tax imposed

under this subpart or a tax measured by net income, imposed on

the shareholder by another state.

basis in the stock of a Pennsylvania S corporation is reduced to

zero, excess losses will reduce the shareholder's basis, but not

below zero, in any indebtedness of the Pennsylvania S

corporation to the shareholder.

(d) Reduced basis.--If a shareholder's basis in any

indebtedness is reduced under subsection (c), the reduction

shall be restored before the shareholder's basis in the

Pennsylvania S corporation's stock is increased.

§ 2242. Distributions.

(a) Distribution of property to shareholder.--A distribution

of property by a Pennsylvania S corporation which has no

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accumulated earnings and profits to a shareholder of the

corporation shall not be included in the shareholder's income to

the extent that it does not exceed the shareholder's adjusted

basis in the stock. An amount of the distribution in excess of

the adjusted basis in the stock shall be treated as a gain from

the sale, exchange or other disposition of property.

(b) Excess treated as dividend.--

(1) A distribution of property by a Pennsylvania S

corporation which has accumulated earnings and profits shall

be treated in the same manner as a distribution by a

Pennsylvania S corporation without earnings and profits to

the extent of the corporation's accumulated adjustment

account.

(2) The portion of the distribution in excess of the

accumulated adjustment account will be treated as a dividend

to the extent of the accumulated earnings and profits of the

corporation.

(3) A portion of the distribution in excess of the

accumulated earnings and profits of the corporation shall be

treated in the same manner as a distribution from a

Pennsylvania S corporation without accumulated earnings and

profits.

rata distribution of property, the adjustment shall be limited

to an amount which bears the same ratio to the balance in the

account as the number of shares sold, exchanged or otherwise

disposed of bears to the number of shares in the corporation

outstanding immediately before the sale, exchange or

disposition.

(d) Definitions.--As used in this section, the following

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words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Accumulated adjustment account." An account of the

Pennsylvania S corporation which is cumulatively adjusted for

the most recent continuous period during which the corporation

has been a Pennsylvania S corporation by increasing the account

for corporate income and decreasing the account for corporate

losses and all distributions of property by the corporation to

the shareholders which were not included in the income of the

shareholders, provided that no adjustment shall be made for

income or loss not in any of the classes of income enumerated in

section 2203 (relating to classes of income) or for a

nondeductible expense.

SUBCHAPTER E

OTHER ENTITIES

Sec.

2251. Treatment of unincorporated entities with single owners.

§ 2251. Treatment of unincorporated entities with single

owners.

Unless subject to tax under Article IV of the Tax Reform Code

of 1971, an unincorporated entity that has a single owner shall

be disregarded as an entity separate from the entity's owner.

SUBCHAPTER F

NONRESIDENT INDIVIDUALS

Sec.

2261. Nonresident individuals and taxable income.

2262. Spouses.

2263. Allocation of income of nonresident.

§ 2261. Nonresident individuals and taxable income.

The income of a nonresident individual shall be the part of

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the nonresident individual's income derived from sources within

this Commonwealth as defined in this subpart.

§ 2262. Spouses.

(a) Separate return.--For spouses who are both nonresidents

of this Commonwealth and subject to tax under this subpart, if

the income of either spouse is determined on a separately filed

return, each spouse's income from sources within this

Commonwealth shall be separately determined.

(b) One spouse a nonresident.--If a spouse is a nonresident

of this Commonwealth and the other spouse is a resident of this

Commonwealth, separate taxes shall be determined on the spouses'

separate incomes on forms as the department shall prescribe,

unless both spouses elect to determine the spouses' joint income

as if both spouses were residents of this Commonwealth, in which

case the spouses' tax liabilities shall be joint and several.

§ 2263. Allocation of income of nonresident.

If a nonresident taxpayer earns, receives or acquires income

from sources partly within and partly outside this Commonwealth

or engages in a business, trade, profession or occupation partly

within and partly outside this Commonwealth and that portion of

the income derived from or connected with sources within this

Commonwealth cannot readily or accurately be ascertained, the

department shall by regulation prescribe uniform rules for

apportionment or allocation of the amount of the taxpayer's

income as fairly and equitably represents income derived from

sources within this Commonwealth and subject to tax under this

subpart.

CHAPTER 23

CREDITS AGAINST TAX

Sec.

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2301. Tax withheld.

2302. Tax paid under previous act.

2303. Income taxes imposed by other states.

§ 2301. Tax withheld.

The amount withheld under section 2502 (relating to

requirement of withholding tax) shall be allowed to the taxpayer

from whose income the tax was withheld as a credit against the

tax imposed on the taxpayer by this subpart.

§ 2302. Tax paid under previous act.

The amount of tax withheld from an employee and paid over to

the Commonwealth or paid over by a taxpayer as an estimated

payment under former Article III of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, which was

repealed by the act of August 31, 1971 (P.L.362, No.93), shall

be held as a credit against the tax imposed by former Article

III of the Tax Reform Code of 1971.

§ 2303. Income taxes imposed by other states.

(a) Credit.--

(1) A resident taxpayer, before allowance of a credit

under section 2301 (relating to tax withheld), shall be

allowed a credit against the tax otherwise due under this

subpart for the amount of income tax, wage tax or tax on or

measured by gross or net earned or unearned income imposed on

the resident taxpayer or on a Pennsylvania S corporation in

which the resident taxpayer is a shareholder, to the extent

of the resident taxpayer's pro rata share of the tax

determined under section 2239 (relating to income of

Pennsylvania S corporations taxed to shareholders), by

another state with respect to income which is also subject to

tax under this subpart.

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(2) For purposes of this subsection, the term "state"

shall only include a state of the United States, the District

of Columbia, the Commonwealth of Puerto Rico and a territory

or possession of the United States.

(b) Credit limit.--The credit provided under this section

shall not exceed the proportion of the tax otherwise due under

this subpart that the amount of the taxpayer's income subject to

tax by the other jurisdiction bears to the taxpayer's entire

taxable income.

CHAPTER 24

CONTRIBUTIONS OF REFUNDS BY CHECKOFF

Subchapter

A. Preliminary Provisions

B. Contributions

SUBCHAPTER A

PRELIMINARY PROVISIONS

Sec.

2401. Definitions.

2402. Operational provisions.

§ 2401. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Individual income tax." The tax imposed under this subpart.

§ 2402. Operational provisions.

(a) Expiration.--Except as described in subsection (b), a

checkoff established under this chapter and applicable for the

first time in a taxable year beginning after December 31, 2009,

shall expire four years after the beginning of the first taxable

year.

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(b) No expiration.--Notwithstanding subsection (a), the

checkoffs established under the following sections shall not

expire:

(1) Section 2411 (relating to contributions to breast

and cervical cancer research).

(2) Section 2412 (relating to contributions for wild

resource conservation).

(3) Section 2413 (relating to contributions for organ

and tissue donation awareness).

(4) Section 2414 (relating to contributions for juvenile

diabetes cure research).

(5) Section 2415 (relating to contributions for military

family relief assistance).

(6) Section 2416 (relating to contributions for

Children's Trust Fund).

(7) Section 2417 (relating to contributions for American

Red Cross).

SUBCHAPTER B

CONTRIBUTIONS

Sec.

2411. Contributions for breast and cervical cancer research.

2412. Contributions for wild resource conservation.

2413. Contributions for organ and tissue donation awareness.

2414. Contributions for juvenile diabetes cure research.

2415. Contributions for military family relief assistance.

2416. Contributions for Children's Trust Fund.

2417. Contributions for American Red Cross.

2418. Contributions for tuition account programs.

2419. Contributions for pediatric cancer research.

2420. Contributions for Veterans' Trust Fund.

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§ 2411. Contributions for breast and cervical cancer research.

(a) Contribution.--The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to breast and cervical cancer research.

(b) Deduction from refund.--The amount designated on the

Pennsylvania individual income tax return form shall be deducted

from the tax refund to which the individual is entitled and

shall not constitute a charge against the income tax revenues

due to the Commonwealth.

annually the total amount designated under this section, less

reasonable administrative costs, and shall report the amount to

the State Treasurer who shall transfer the amount from the

General Fund to the Pennsylvania Breast Cancer Coalition.

(d) Instructions for contributions.--The department shall

provide adequate information concerning the checkoff for breast

and cervical cancer research in the instructions which accompany

State income tax return forms, which shall include the listing

of an address furnished to it by the Department of Health to

which contributions may be sent by taxpayers wishing to

contribute to this effort but who do not receive refunds. The

Pennsylvania Breast Cancer Coalition shall conduct a public

information campaign on the opportunity to contribute to breast

and cervical cancer research to Pennsylvania taxpayers.

(e) Report.--The Pennsylvania Breast Cancer Coalition shall

report annually to the chairperson and minority chairperson of

the Health and Human Services Committee of the Senate and the

chairperson and minority chairperson of the Health Committee of

the House of Representatives the amount received from the

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checkoff plan and how the money was utilized.

(f) Appropriation.--The General Assembly may appropriate

funds for breast and cervical cancer research.

§ 2412. Contributions for wild resource conservation.

(a) Contribution.--The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to the Wild Resource Conservation Fund established under

section 5 of the act of June 23, 1982 (P.L.597, No.170), known

as the Wild Resource Conservation Act.

(b) Deduction from refund.--The amount designated by an

individual on the income tax return form shall be deducted from

the tax refund to which the individual is entitled and shall not

constitute a charge against the income tax revenues due to the

Commonwealth.

annually the total amount designated under this section and

shall report the amount to the State Treasurer who shall

transfer the amount from the General Fund to the Wild Resource

Conservation Fund for use as provided in the Wild Resource

Conservation Act. The department shall be reimbursed from the

fund for administrative costs incurred above and beyond the cost

savings the department realizes as a result of individual total

refund designations.

(d) Instructions for contributions.--The department shall

provide adequate information concerning the Wild Resource

Conservation Fund in the instructions which accompany State

income tax return forms, which shall include the listing of an

address furnished to it by the Wild Resource Conservation Board

to which contributions may be sent by taxpayers wishing to

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contribute to the fund but who do not receive refunds.

(e) Applicability.--This section shall apply to taxable

years beginning on or after January 1, 1997.

§ 2413. Contributions for organ and tissue donation awareness.

(a) Contribution.--The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to the Governor Robert P. Casey Memorial Organ and Tissue

Donation Awareness Trust Fund established under 20 Pa.C.S. §

8622 (relating to the Governor Robert P. Casey Memorial Organ

and Tissue Donation Awareness Trust Fund).

(b) Deduction from refund.--The amount designated by an

individual on the Pennsylvania individual income tax return form

shall be deducted from the tax refund to which the individual is

entitled and shall not constitute a charge against the income

tax revenues due to the Commonwealth.

determine the total amount designated under this section and

shall report the amount to the State Treasurer who shall

transfer the amount to the Governor Robert P. Casey Memorial

Organ and Tissue Donation Awareness Trust Fund.

(d) Instructions for contributions.--The department shall

provide on its forms or in the instructions which accompany

Pennsylvania individual income tax return forms adequate

information concerning the Governor Robert P. Casey Memorial

Organ and Tissue Donation Awareness Trust Fund, which shall

include the listing of an address furnished to it by the Organ

Donation Advisory Committee to which contributions may be sent

by taxpayers wishing to contribute to the fund but who do not

receive refunds.

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(e) Applicability.--This section shall apply to taxable

years beginning on or after January 1, 1997.

§ 2414. Contributions for juvenile diabetes cure research.

(a) Contribution.--The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount for juvenile diabetes cure research related to:

(1) Restoring normal blood sugar levels.

(2) Preventing and reversing complications.

(3) Preventing juvenile diabetes.

(b) Deduction from refund.--The amount designated on the

Pennsylvania individual income tax return form shall be deducted

from the tax refund to which the individual is entitled and

shall not constitute a charge against the income tax revenues

due to the Commonwealth.

(1) The department shall determine annually the total

amount designated under this section, less reasonable

administrative costs, and shall report the amount to the

State Treasurer, who shall transfer the amount to a

restricted revenue account within the General Fund to be used

by the Department of Health for aiding juvenile diabetes cure

research.

(2) The Department of Health shall distribute the

amounts to institutions of higher education and independent

research institutes of this Commonwealth to support projects

that have been subject to an established peer and scientific

review process identical or similar to the National

Institutes of Health review system.

(d) Instructions for contributions.--The department shall

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provide adequate information concerning the checkoff for

juvenile diabetes cure research in the instructions which

accompany the Pennsylvania income tax return forms, which shall

include the listing of an address furnished to it by the

Department of Health to which contributions may be sent by

taxpayers wishing to contribute to this effort but who do not

receive refunds.

(e) Report.--The Department of Health shall report annually

to the chairperson and minority chairperson of the Health and

Human Services Committee of the Senate and the chairperson and

minority chairperson of the Health Committee of the House of

Representatives the amount received from the checkoff plan and

how the money was utilized.

§ 2415. Contributions for military family relief assistance.

(a) Contribution.--Beginning with taxable years ending after

December 31, 2004, the department shall provide a space on the

Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to a fund for military family relief assistance.

(b) Deduction from refund.--The amount designated on the

Pennsylvania individual income tax return form shall be deducted

from the tax refund to which the individual is entitled and

shall not constitute a charge against the income tax revenues

due to the Commonwealth.

annually the total amount designated under this section, less

reasonable administrative costs, and shall report the amount to

the State Treasurer who shall transfer the amount to a

restricted revenue account within the General Fund to be used by

the Department of Military and Veterans Affairs for

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contributions to military family relief assistance as provided

by statute.

(d) Instructions for contributions.--The department shall

provide adequate information concerning the checkoff for

military family relief assistance in the instructions which

accompany the Pennsylvania income tax return forms, which shall

include the listing of an address furnished to it by the

Department of Military and Veterans Affairs to which

contributions may be sent by taxpayers wishing to contribute to

this effort but who do not receive refunds.

(e) Report.--The Department of Military and Veterans Affairs

shall report annually to the chairperson and minority

chairperson of the Veterans Affairs and Emergency Preparedness

Committee of the Senate and the chairperson and minority

chairperson of the Veterans Affairs and Emergency Preparedness

Committee of the House of Representatives the amount received

from the checkoff plan and how the money was utilized.

§ 2416. Contributions for Children's Trust Fund.

(a) Contribution.--The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to the Children's Trust Fund established in section 8 of

the act of December 15, 1988 (P.L.1235, No.151), known as the

Children's Trust Fund Act.

(b) Deduction from refund.--The amount designated under

subsection (a) by an individual on the income tax return form

shall be deducted from the tax refund to which the individual is

entitled and shall not constitute a charge against the income

tax revenues due to the Commonwealth.

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annually the total amount designated under this section, less

reasonable administrative costs, and shall report the amount to

the State Treasurer, who shall transfer the amount from the

General Fund to the Children's Trust Fund.

§ 2417. Contributions for American Red Cross.

(a) Contribution.--The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to the American Red Cross established under 36 U.S.C. Ch.

3001 (relating to the American National Red Cross).

(b) Deduction from refund.--The amount designated under

subsection (a) by an individual on the income tax return form

shall be deducted from the tax refund to which the individual is

entitled and shall not constitute a charge against the income

tax revenues due to the Commonwealth.

annually the total amount designated under this section, less

reasonable administrative costs, and shall report the amount to

the State Treasurer, who shall transfer the amount from the

General Fund to the American Red Cross.

§ 2418. Contributions for tuition account programs.

(a) Contribution.--Beginning with the 2016 Pennsylvania

individual income tax return, the department shall provide a

space on the income tax return form by which a taxpayer who is

an account owner may voluntarily designate a contribution to a

beneficiary's Tuition Account Guaranteed Savings Program or the

Tuition Account Investment Program established under the act of

April 3, 1992 (P.L.28, No.11), known as the Tuition Account

Programs and College Savings Bond Act.

(b) Deduction from refund.--The amount designated under

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subsection (a) by a taxpayer on the income tax return form shall

be deducted from the tax refund to which the individual is

entitled and shall not constitute a charge against the income

tax revenues due to the Commonwealth.

annually the amount designated under this section and shall

report the amount to the State Treasurer, who shall transfer the

amount from the General Fund to the appropriate account within

the Tuition Account Guaranteed Savings Program or the Tuition

Account Investment Program.

(d) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Account owner." As defined in section 302 of the Tuition

Account Programs and College Savings Bond Act.

"Beneficiary." As defined in section 302 of the Tuition

Account Programs and College Savings Bond Act.

§ 2419. Contributions for pediatric cancer research.

(a) Contribution.-- The department shall provide a space on

the Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution of any

amount to be utilized for pediatric cancer research. On or

before December 1 of each year, the Secretary of Health shall

designate hospitals within this Commonwealth conducting

pediatric cancer research that are eligible to receive funding

under this section for the following calendar year.

(b) Deduction from refund.--The amount designated on the

individual income tax return form shall be deducted from the tax

refund to which the individual is entitled and shall not

constitute a charge against the income tax revenues due to the

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Commonwealth.

annually the total amount designated under this section, less

reasonable administrative costs, and shall report the amount to

the State Treasurer, who shall transfer the amount from the

General Fund to the Pennsylvania Cancer Control, Prevention and

Research Advisory Board within the Department of Health.

(d) Instructions for contributions.--The department shall

provide adequate information concerning the checkoff for

pediatric cancer research in the instructions that accompany

State income tax return forms, which shall include the listing

of an address furnished to it by the Department of Health to

which contributions may be sent by taxpayers wishing to

contribute to this effort but who do not receive refunds. The

Department of Health shall conduct a public information campaign

on the availability of this opportunity to Pennsylvania

taxpayers.

(e) Report.--The Department of Health shall report annually

to the chairperson and minority chairperson of the Health and

Human Services Committee of the Senate and the chairperson and

minority chairperson of the Health Committee of the House of

Representatives the amount received from the checkoff plan and

how the money was utilized.

§ 2420. Contributions for Veterans' Trust Fund.

(a) Contribution.--For taxable years beginning after

December 31, 2019, the department shall provide a space on the

Pennsylvania individual income tax return form where an

individual may voluntarily designate a contribution, in any

amount, to the Veterans' Trust Fund.

(b) Deduction from refund.--The amount designated on the

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individual income tax return shall be deducted from the tax

refund to which the individual is entitled and shall not

constitute a charge against the income tax revenues due to the

Commonwealth.

annually the total amount designated under this section, less

reasonable administrative costs, and shall report the amount to

the State Treasurer who shall transfer the amount to the

Veterans' Trust Fund.

(d) Instructions for contributions.--The department shall

provide adequate information concerning the checkoff for the

Veterans' Trust Fund in its instructions that accompany the

State income tax return forms, which shall include the listing

of an address furnished by the Department of Military and

Veterans Affairs to which contributions may be sent by taxpayers

wishing to contribute to this effort but who do not receive

refunds.

(e) Report.--The Department of Military and Veterans Affairs

shall report annually to the respective committees of the Senate

and the House of Representatives which have jurisdiction over

military and veterans affairs on the amount received from the

checkoff plan and how the funds were utilized.

CHAPTER 25

WITHHOLDING OF TAX

Subchapter

A. Withholding Tax Generally

B. Withholding Tax on Income from Sources Within

Commonwealth

SUBCHAPTER A

WITHHOLDING TAX GENERALLY

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Sec.

2501. Definitions.

2502. Requirement of withholding tax.

2503. Withholding tax requirement for nonemployer payors.

2504. Information statement.

2505. Information statement for nonemployer payors.

2506. Information statement for payees.

2507. Time for filing withholding returns.

2508. Time for filing payors' returns.

2509. Payment of taxes withheld.

2510. Payment of taxes withheld for nonemployer payors.

2511. Liability for withheld taxes.

2512. Payor's liability for withheld taxes.

2513. Failure to withhold.

2514. Bulk and auction sales and transfers and notice.

2515. Payor's failure to withhold.

2516. Designation of third parties to perform acts required of

employers.

2517. When withholding not required.

§ 2501. Definitions.

The following words and phrases when used in this subchapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Payee." The person receiving the payments subject to

withholding under this subchapter.

"Payments." The term shall not include a partner or

shareholder's distributive share of income from a partnership or

Pennsylvania S corporation.

"Payor." The person required to withhold under this

subchapter.

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§ 2502. Requirement of withholding tax.

(a) General rule.--An employer maintaining an office or

transacting business within this Commonwealth and making payment

of compensation to a resident individual or a nonresident

individual taxpayer performing services on behalf of the

employer within this Commonwealth shall deduct and withhold from

the employee's compensation for each payroll period a tax

computed in a manner as to result in withholding from the

employee's compensation during each calendar year an amount

substantially equivalent to the tax reasonably estimated to be

due for the year with respect to the compensation. The method of

determining the amount to be withheld shall be prescribed by

regulations of the department.

(b) Lottery winnings.--If the Pennsylvania State Lottery or

a person making a Pennsylvania State Lottery prize payment in

the form of an annuity is required to withhold Federal income

tax under section 3402 of the Internal Revenue Code of 1986 or

backup withholding under section 3406 of the Internal Revenue

Code of 1986 from a gambling or lottery prize payment awarded by

the Pennsylvania State Lottery that is taxable under this

chapter, the Pennsylvania State Lottery or the person making the

annuity payment shall deduct and withhold from the prize payment

an amount equal to the amount of the prize payment subject to

withholding under section 3402 or 3406 of the Internal Revenue

Code of 1986 multiplied by the tax rate in effect under this

subpart at the time the prize payment is made.

§ 2503. Withholding tax requirement for nonemployer payors.

(a) General requirements.--Notwithstanding the provisions of

section 2502 (relating to requirement of withholding tax), a

person shall deduct and withhold from the payments an amount

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equal to the net amount of the payments multiplied by the tax

rate specified under section 2201(b) (relating to imposition of

tax) if the person:

(1) makes payments of income from sources within this

Commonwealth described in section 2203(a)(1) or (2) (relating

to classes of income) to either a nonresident individual or

an entity that is disregarded under section 2251 (relating to

treatment of unincorporated entities with single owners) that

has a nonresident member; and

(2) is required under section 2707(f)(1) (relating to

requirements concerning returns, notices, records and

statements) to file a copy of form 1099-MISC or 1099-NEC with

the department regarding the payments.

(b) Optional withholding.--Withholding of tax by payors is

optional and at the discretion of the payor with respect to

payees who receive payments of less than $5,000 annually from

the payor.

payments made by a payor to a payee if the payor is any of the

following:

(1) The United States or an agency or instrumentality of

the United States.

(2) The Commonwealth or an agency, instrumentality or

political subdivision of the Commonwealth.

(d) Regulations.--The department may prescribe regulations

to implement and clarify the withholding requirement specified

in this section.

§ 2504. Information statement.

(a) Statement.--

(1) An employer required to deduct and withhold tax

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under section 2502(a) (relating to requirement of withholding

tax) shall furnish to each employee paid compensation during

the calendar year a written statement in the manner and form

prescribed by the department showing:

(i) The amount of compensation paid by the employer

to the employee.

(ii) The amount deducted and withheld as tax under

section 2502(a).

(iii) Other information as the department shall

prescribe.

(2) Each statement required by this section for a

calendar year shall be furnished to the employee on or before

January 31 of the year succeeding the calendar year.

(3) If the employee's employment is terminated before

the close of the calendar year, the employer shall furnish

the statement to the employee at any time after the

termination but no later than January 31 of the year

succeeding the calendar year.

(4) If an employee who is terminated before the close of

the calendar year requests the employer in writing to furnish

the employee the statement at an earlier time and, if there

is no reasonable expectation on the part of the employer and

employee of further employment during the calendar year, the

employer shall furnish the statement to the employee on or

before the 30th day after the day of the request or the 30th

day after the day on which the last payment of wages is made,

whichever occurs later.

(b) Lottery winnings.--A person required to deduct and

withhold tax under section 2502(b) shall report the prize and

the amount of withholding to the taxpayer on Internal Revenue

20250HB1649PN2003 - 253 -

Service Form W-2G or similar form used for reporting Federal

income tax withholding from the prize.

§ 2505. Information statement for nonemployer payors.

(a) Form to be furnished.--A payor required to deduct and

withhold tax under section 2503 (relating to withholding tax

requirement for nonemployer payors) shall furnish to a payee to

whom the payor has paid income from sources within this

Commonwealth during the calendar year a copy of form 1099-MISC

or 1099-NEC required under section 2707(f)(1) (relating to

requirements concerning returns, notices, records and

statements).

(b) Time frame.--The copy of form 1099-MISC or 1099-NEC

required by this section for each calendar year shall be

forwarded to the payee on or before March 1 of the year

succeeding the calendar year.

§ 2506. Information statement for payees.

A payee receiving a copy of form 1099-MISC or 1099-NEC from a

payor under section 2505 (relating to information statement for

nonemployer payors) shall file a duplicate of the form with the

payee's State income tax return.

§ 2507. Time for filing withholding returns.

(a) Quarterly filing.--

(1) An employer required to deduct and withhold tax

under section 2502(a) (relating to requirement of withholding

tax) shall file a quarterly withholding return on or before

the last day of April, July, October and January for the

three months ending the last day of March, June, September

and December.

(2) Quarterly returns shall be filed with the department

at the department's main office or at any branch office that

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the department designates for filing returns.

(b) Time frame for filing.--A person required to deduct and

withhold tax under section 2502(b) shall file a withholding tax

return at the same time the person is required to file the

person's annual return of withheld Federal income tax,

designated as IRS Form 945, from nonpayroll payments. The return

shall be filed with the department.

§ 2508. Time for filing payors' returns.

(a) Quarterly filing.--A payor required to deduct and

withhold tax under section 2503 (relating to withholding tax

requirement for nonemployer payors) shall file a quarterly

withholding return on or before the last day of April, July,

October and January for each three-month period ending the last

day of March, June, September and December.

(b) Manner of filing.--The quarterly returns shall be filed

with the department in the manner prescribed by regulation.

§ 2509. Payment of taxes withheld.

(a) Payment of tax by employer.--

(1) An employer withholding tax under section 2502(a)

(relating to requirement of withholding tax) shall pay over

to the department or to a depository designated by the

department the tax required to be deducted and withheld under

section 2502(a). The following shall apply:

(i) If the aggregated amount required to be deducted

and withheld by an employer for a calendar year is

expected to be less than $1,200, the employer shall file

a return and pay the tax on or before the last day for

filing a quarterly return under section 2507 (relating to

time for filing withholding returns).

(ii) If the aggregated amount required to be

20250HB1649PN2003 - 255 -

deducted and withheld by an employer for a calendar year

is expected to be $1,200 or more but less than $4,000,

the employer shall pay the tax monthly on or before the

15th day of the month succeeding the months of January to

November, inclusive, and on or before the last day of

January following the month of December.

(iii) If the aggregated amount required to be

deducted and withheld by an employer for a calendar year

is expected to be $4,000 or more but less than $20,000,

the employer shall pay the tax semimonthly within three

banking days after the close of the semimonthly period.

(iv) If the aggregated amount required to be

deducted and withheld by an employer for a calendar year

is expected to be $20,000 or more, the employer shall pay

the tax on the Wednesday after payday if the payday falls

on a Wednesday, Thursday or Friday and on the Friday

after payday if the payday falls on a Saturday, Sunday,

Monday or Tuesday.

(2) (i) If an employer fails to deduct, truthfully

account for or pay the tax withheld or file returns as

prescribed by this chapter, the department may serve a

notice on the employer requiring the employer to:

(A) withhold taxes which are required to be

deducted under section 2502(a);

(B) deposit the taxes in a bank approved by the

department in a separate account in trust for and

payable to the department; and

until payment is made to the department.

(ii) The notice under subparagraph (i) shall remain

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in effect until the department serves a notice of

cancellation on the employer.

(b) Frequency of remittance.--A person deducting and

withholding tax under section 2502(b) shall remit the tax to the

department on the same frequency that the person is required to

remit Federal income tax withheld from nonpayroll payments.

§ 2510. Payment of taxes withheld for nonemployer payors.

A payor withholding tax under section 2503 (relating to

withholding tax requirement for nonemployer payors) shall pay

over to the department or a depository designated by the

department the tax required to be deducted and withheld under

section 2503. The time for paying over the withheld tax shall be

as specified in section 2509(a)(1)(i), (ii), (iii) and (iv)

(relating to payment of taxes withheld).

§ 2511. Liability for withheld taxes.

(a) Liability.--A person required to deduct and withhold tax

under section 2502 (relating to requirement of withholding tax)

is liable for the tax.

(b) Enforcement.--

(1) For purposes of assessment and collection, an amount

required to be withheld and paid to the department and

additions to tax penalties and interest shall be considered

the tax of the person.

(2) Taxes deducted and withheld under section 2502 or

under color of section 2502 shall constitute a trust fund for

the Commonwealth and shall be enforceable against the person,

the person's representative or any other person receiving a

part of the fund.

§ 2512. Payor's liability for withheld taxes.

(a) Liability.--A payor required to deduct and withhold tax

20250HB1649PN2003 - 257 -

under section 2503 (relating to withholding tax requirement for

nonemployer payors) is liable for the tax.

(b) Enforcement.--

(1) For purposes of assessment and collection, an amount

required to be withheld and paid to the department and

additions to tax, penalties and interest shall be considered

the tax of the payor.

(2) Taxes deducted and withheld from payees under

section 2503 or under color of section 2503 shall constitute

a trust fund for the Commonwealth and shall be enforceable

against the payor, the payor's representative or any other

person receiving a part of the fund.

§ 2513. Failure to withhold.

If a person fails to deduct and withhold tax as prescribed in

this subchapter but subsequently pays the tax, the tax which was

required to be deducted and withheld shall not be collected from

the person, but the person shall be liable for penalties,

interest or additions imposed for failure to deduct and withhold

the tax.

§ 2514. Bulk and auction sales and transfers and notice.

An employer liable for filing returns in accordance with this

subpart who sells, causes to be sold at auction or sells or

transfers in bulk 51% or more of the employer's stock of goods,

wares, merchandise, fixtures, machinery, equipment, buildings or

real estate held by or on behalf of the employer shall be

subject to section 1403 of the Fiscal Code.

§ 2515. Payor's failure to withhold.

If a payor fails to deduct and withhold tax as prescribed

under section 2503 (relating to withholding tax requirement for

nonemployer payors) but subsequently pays the tax, the tax which

20250HB1649PN2003 - 258 -

was required to be deducted and withheld shall not be collected

from the payor, but the payor shall be liable for penalties,

interest or additions imposed for failure to deduct and

withhold.

§ 2516. Designation of third parties to perform acts required

of employers.

If a fiduciary, agent or other person has the control,

receipt, custody or disposal of or pays the compensation of an

employee or a group of employees employed by one or more

employers, the department may designate the fiduciary, agent or

other person to perform acts required of employers under this

subpart as the department may by regulation prescribe. Except as

otherwise prescribed by the department, all provisions of this

subpart which are applicable to an employer shall be applicable

to a fiduciary, agent or other person.

§ 2517. When withholding not required.

On and after January 1, 1975, an employer shall not be

required to withhold tax upon payment of wages to an employee if

the employee can certify that the employee:

(1) incurred no personal income tax liability for the

preceding tax year; and

(2) anticipates no liability for personal income tax for

the current taxable year.

SUBCHAPTER B

WITHHOLDING TAX ON INCOME FROM SOURCES

WITHIN COMMONWEALTH

Sec.

2521. General rule.

2522. Amount of withholding tax.

2523. Treatment of nonresident partners, members or

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shareholders.

2524. Liability for tax, interest, penalties and additions.

2525. Withholding on income.

2526. Annual withholding statement.

§ 2521. General rule.

(a) Time for payment.--

(1) If a partnership, estate, trust or Pennsylvania S

corporation receives income from sources within this

Commonwealth for a taxable year and a portion of the income

is allocable to a nonresident partner, beneficiary, member or

shareholder of the partnership, estate, trust or Pennsylvania

S corporation, the partnership, estate, trust or Pennsylvania

S corporation shall pay a withholding tax under this section

at the time and in the manner prescribed by the department.

(2) Notwithstanding any other provision of this subpart,

all withholding tax shall be paid on or before the 15th day

of the fourth month following the end of the taxable year.

(b) Applicability.--This section shall not apply to a

publicly traded partnership as defined under section 7704 of the

Internal Revenue Code of 1986 with equity securities registered

with the Securities and Exchange Commission under 15 U.S.C. §

781 (relating to registration requirements for securities).

§ 2522. Amount of withholding tax.

(a) Calculation.--The amount of tax withheld from

nonresidents and the amount of withholding tax payable under

section 2521 (relating to general rule) shall be equal to the

income from sources within this Commonwealth of the partnership,

association or Pennsylvania S corporation which is allocable to

nonresident partners, members or shareholders multiplied by the

tax rate specified in section 2201(b) (relating to imposition of

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tax).

(b) Income, gain, loss or deduction.--There shall not be

taken into account items of income, gain, loss or deduction to

the extent allocable to a partner, member or shareholder who is

not a nonresident.

a share of income of a nonresident partner, member or

shareholder from sources within this Commonwealth to the extent

that the amount was subject to withholding under section 2526

(relating to annual withholding statement) and to the extent

withholding actually occurred under section 2525 (relating to

withholding on income) by the time withholding is required to be

made by the partnership, association or Pennsylvania S

corporation under section 2521.

§ 2523. Treatment of nonresident partners, members or

shareholders.

(a) Credit for partner, member, shareholder or holder of

beneficial interest.--

(1) A nonresident partner, member, shareholder or holder

of a beneficial interest shall be allowed a credit for the

partner's, member's, shareholder's or holder of a beneficial

interest's share of the withholding tax paid by the

partnership, association or Pennsylvania S corporation.

(2) The credit shall be allowed for the partner's,

member's, shareholder's or holder of a beneficial interest's

taxable year in which the partnership's, association's or

Pennsylvania S corporation's taxable year for which the tax

was paid ends.

(b) Nonresident lessor credit.--

(1) A nonresident lessor shall be allowed a credit for

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the nonresident lessor's share of the withholding tax paid by

the lessee under section 2525 (relating to withholding on

income).

(2) The credit under this subsection shall be allowed

for the nonresident lessor's taxable year in which the lessee

withheld tax.

§ 2524. Liability for tax, interest, penalties and additions.

If a partnership, association or Pennsylvania S corporation

fails to pay withholding tax as prescribed in this subchapter

but subsequently pays the tax, the partnership, association or

Pennsylvania S corporation shall be liable for penalties,

interest or additions imposed for failure to properly withhold

the tax.

§ 2525. Withholding on income.

(a) Income tax on lease payments.--A lessee of real estate

in this Commonwealth who makes a lease payment in the course of

a trade or business to a nonresident lessor shall withhold

Pennsylvania personal income tax on lease payments to the

nonresident lessor.

(b) Amount of tax.--A lessee shall withhold from each

payment made to a lessor an amount equal to the net amount

payable to the lessor multiplied by the tax rate specified under

section 2201(b) (relating to imposition of tax).

section is optional and at the discretion of the lessee if the

lessee pays the lessor less than $5,000 annually on a lease.

(d) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"In the course of a trade or business." Includes a person,

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other than a tenant of residential property, making lease

payments to a nonresident or agent of a nonresident who collects

rent or lease payments on behalf of a nonresident owner.

"Lease payment." The following shall apply:

(1) The term includes rents, royalties, bonus payments,

damage payments, delay rents and other payments made under a

lease, other than compensation derived from intangible

property having a taxable or business situs in this

Commonwealth.

(2) Classification as a "lease payment" under this

section is solely for the purposes of establishing

withholding requirements and is not relevant for a

determination as to the proper income classification of a

lease payment.

"Lessor." Includes an individual, estate or trust.

§ 2526. Annual withholding statement.

(a) Annual statement to lessor.--A lessee shall furnish to a

lessor an annual statement at the time and in the manner

prescribed by the department showing the total payments made by

the lessee to the lessor during the preceding taxable year and

showing the amount of the tax deducted and withheld from the

payments under section 2525 (relating to withholding on income).

(b) Annual statement to department.--A lessee shall file

with the department an annual statement at the time and in the

manner prescribed by the department showing the total payments

made to each lessor subject to withholding during the preceding

taxable year or any portion of the preceding taxable year and

the total amount of tax deducted and withheld under section

2525.

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annual statement furnished by the lessee under this section with

the lessor's State income tax return.

CHAPTER 26

ESTIMATED TAX

Sec.

2601. Definitions.

2602. Declarations of estimated tax.

2603. Payments of estimated tax.

§ 2601. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Estimated tax." The amount that an individual, trust or

estate estimates to be the tax due under this subpart for the

taxable year, less the amount estimated to be the sum of credits

allowable against the tax under this subpart.

§ 2602. Declarations of estimated tax.

(a) Declaration.--A resident or nonresident individual,

trust or estate shall, at the time specified under this section,

make a declaration of the estimated tax for the taxable year

containing information as the department may prescribe by

regulation, if the individual's, trust's or estate's income,

other than from income on which tax is withheld under this

subchapter, is expected to exceed $8,000.

(b) Joint declaration.--

(1) Spouses may make a joint declaration of estimated

tax under this section as if they were one taxpayer, in which

case the liability with respect to the estimated tax shall be

joint and several.

(2) If a joint declaration is made but the spouses elect

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to determine each spouse's taxes separately, the spouses may

choose to treat the estimated tax for the year as the

estimated tax of either spouse or to divide the estimated tax

between them.

section, the date for filing a declaration of estimated tax

shall depend upon when the resident or nonresident individual,

trust or estate determines that the income on which no tax has

been withheld under this subchapter is expected to exceed $8,000

in the taxable year. The following shall apply:

(1) If the determination is made on or before April 1 of

the taxable year, a declaration of estimated tax shall be

filed no later than April 15 of the taxable year.

(2) If the determination is made after April 1 but

before June 2 of the taxable year, the declaration shall be

filed no later than June 15 of the taxable year.

(3) If the determination is made after June 1 but before

September 2 of the taxable year, the declaration shall be

filed no later than September 15 of the taxable year.

(4) If the determination is made after September 1 of

the taxable year, the declaration shall be filed no later

than January 15 of the year succeeding the taxable year.

(d) Income from farming.--

(1) Notwithstanding subsection (c), a declaration of

estimated tax of an individual having an estimated gross

income from farming for the taxable year which is at least

two-thirds of the individual's total estimated gross income

for the taxable year may be filed at any time on or before

January 15 of the succeeding year.

(2) If a farmer files a final return and pays the entire

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tax by March 1, the return may be considered the declaration

due on or before January 15.

(e) Estimated tax less than $100.--A declaration of

estimated tax of an individual, trust or estate having a total

estimated tax for the taxable year of $100 or less may be filed

at any time on or before January 15 of the succeeding year under

regulations of the department.

(f) Amendment of declaration.--An individual, trust or

estate may amend a declaration under regulations of the

department.

(g) Filing and paying for full year.--If, on or before

January 31 of the year succeeding a taxable year, an individual,

trust or estate files a return for the entire taxable year for

which a declaration was required to be filed within the time

prescribed under subsection (c)(4) and pays the full amount of

the tax due on the return:

(1) The return shall be considered the declaration which

was required to be filed no later than January 15.

(2) The return shall be considered as the amendment

permitted under subsection (f) to be filed on or before

January 15, if the amount of tax shown on the return is

greater than the amount of estimated tax shown in a

declaration previously made.

(h) Noncalendar taxable year.--This subpart shall apply to a

taxable year other than a calendar year by the substitution of

the months of the fiscal year for the corresponding months

specified in this section.

(i) Short taxable year.--This subpart shall apply to an

individual, trust or estate having a taxable year of less than

12 months in accordance with regulations of the department.

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§ 2603. Payments of estimated tax.

(a) Payments generally.--Subject to the provisions of

section 2602(i) (relating to declarations of estimated tax), the

estimated tax with respect to which a declaration is required

shall be paid as follows:

(1) If the declaration is filed on or before April 15 of

the taxable year, the estimated tax shall be paid in four

equal installments as follows:

(i) The first installment shall be paid at the time

the declaration is filed.

(ii) The second installment shall be paid on or

before the succeeding June 15.

(iii) The third installment shall be paid on or

before the succeeding September 15.

(iv) The fourth installment shall be paid on or

before the succeeding January 15.

(2) If the declaration is not required to be filed on or

before April 15 of the taxable year and is filed after April

15 but before June 16 of the taxable year, the estimated tax

shall be paid in three equal installments as follows:

(i) The first installment shall be paid at the time

the declaration is filed.

(ii) The second installment shall be paid on the

succeeding September 15.

(iii) The third installment shall be paid on the

succeeding January 15.

(3) If the declaration is not required to be filed on or

before June 15 of the taxable year and is filed after June 15

but before September 16 of the taxable year, the estimated

tax shall be paid in two equal installments as follows:

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(i) The first installment shall be paid at the time

the declaration is filed.

(ii) The second installment shall be paid on the

succeeding January 15.

(4) If the declaration is not required to be filed on or

before September 15 of the taxable year and is filed after

September 15 of the taxable year, the estimated tax shall be

paid in full at the time the declaration is filed.

(5) If the declaration is not filed within the time

prescribed in this section or after the expiration of an

extension of time, paragraphs (2), (3) and (4) shall not

apply, and all installments of estimated tax which were due

and payable on or before the date the declaration was filed

shall be paid at the time the declaration is filed. Remaining

installments shall be paid at the times and in the amounts as

if the declaration had been filed when due.

(b) Farming.--If an individual described in section 2602(d)

(relating to declarations of estimated tax) makes a declaration

of estimated tax after September 15 of the taxable year but

before the following March 1, the estimated tax shall be paid in

full at the time of the filing of the declaration.

(1) If an amendment of a declaration is filed, the

remaining unpaid installments, if any, shall be ratably

increased or decreased to reflect an increase or decrease in

the estimated tax by reason of the amendment.

(2) If an amendment is made after September 15 of the

taxable year, an increase in the estimated tax by reason of

the amendment shall be paid at the time the amendment is

made.

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CHAPTER 27

RETURNS AND PAYMENT OF TAX

Sec.

2701. Returns and liability.

2702. Return of Pennsylvania S corporation.

2703. Returns of married, deceased or disabled individuals and

fiduciaries.

2704. Time and place for filing returns and paying tax.

2704.1. Electronic payment.

2705. Signing of returns and other documents.

2706. Extension of time.

2707. Requirements concerning returns, notices, records and

statements.

2708. Timely mailing treated as timely filing and payment.

2709. Procedure for claiming special tax provisions.

2710. Proof of eligibility.

2711. Paid tax return preparers and required information on

personal income tax returns.

§ 2701. Returns and liability.

(a) Tax return.--On or before the date when the taxpayer's

Federal income tax return is due or would be due if the taxpayer

were required to file a Federal income tax return under the

Internal Revenue Code of 1954, a tax return under this subpart

shall be made and filed by or for every taxpayer having income

for the taxable year.

(b) Special provisions for members of armed forces.--

(1) This subsection shall apply to an individual:

(i) serving in the armed forces of the United States

in an area designated by the President of the United

States by Executive order as a "combat zone" as described

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in section 7508 of the Internal Revenue Code of 1986, as

amended, at any time during a period designated by the

President by Executive order as the period of combatant

activities in the combat zone;

(ii) hospitalized within or outside the United

States as a result of injury received while serving in

the combat zone during that time specified in

subparagraph (i); or

(iii) serving in a military capacity as a result of

a Federal callup to active duty or civilian capacity

outside this Commonwealth in support of the armed forces.

(2) The period of service in the area specified in

paragraph (1), plus the period of hospitalization within or

outside the United States attributable to injury, and the

next 180 days shall be disregarded, with respect to tax

liability under this subpart, including interest, penalty,

additional amount or addition to the tax of the individual,

in determining any of the following:

(i) Whether any of the following acts were performed

within the time prescribed in this paragraph:

(A) Filing a return of income tax, except income

tax withheld at source.

(B) Payment of income tax, except income tax

withheld at source, an installment of income tax

withheld at source or any other tax liability to the

Commonwealth.

deficiency or review of a decision rendered by the

department.

(D) Allowance of a credit or refund of a tax.

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(E) Filing a claim for credit or refund of a

tax.

(F) Bringing suit upon a claim for credit.

(G) Assessment of a tax.

(H) Giving or making a notice or demand for the

payment of a tax or a tax liability to the

Commonwealth.

(I) Collection by the department of a tax

liability.

(J) Bringing suit by the Commonwealth, or any

officer on its behalf, in respect of any liability in

respect of any tax.

(K) Any other act required or permitted under

this subpart specified in regulations prescribed by

the department.

(ii) The amount of a credit or refund, including

interest.

(3) This subsection shall apply to the spouse of an

individual entitled to the benefits under this subsection.

This paragraph shall not cause this subsection to apply for a

spouse for a taxable year beginning more than one year after

the date of termination of combatant activities in a combat

zone.

(4) The period of service in the area referred to in

this subsection shall include the period during which an

individual entitled to benefits under this subsection is in a

missing status.

(5) If a qualified individual under paragraph (1) is

killed while serving in a combat zone, the tax liability of

the decedent for the year of death and the immediately prior

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year shall be waived by the Commonwealth.

§ 2702. Return of Pennsylvania S corporation.

(a) Annual return.--Each Pennsylvania S corporation shall

make a return for each taxable year stating all of the

following:

(1) All items of gross income and deductions.

(2) The names and addresses of all persons owning stock

in the corporation at any time during the taxable year.

(3) The number of shares of stock owned by each

shareholder at all times during the taxable year.

(4) The amount of money and other property distributed

by the corporation during the taxable year to each

shareholder.

(5) The date of each distribution.

(6) Each shareholder's pro rata share of each item of

the corporation for the taxable year.

(7) Other information as the department may require.

(b) Time for filing.--The return shall be filed on or before

30 days after the date the corporation's Federal income tax

return is due.

corporation shall also submit to the department a true copy of

the income tax return filed with the Federal Government at the

time the return required under subsection (a) is filed.

(d) Statement to shareholders.--Each Pennsylvania S

corporation required to file a return under subsection (a) for a

taxable year shall, on or before the day on which the return for

the taxable year was filed, furnish to each person who is a

shareholder at any time during the taxable year a written

statement of the shareholder's pro rata share of each item on

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the corporate return on a form required by the department.

§ 2703. Returns of married, deceased or disabled individuals

and fiduciaries.

(a) Separate liabilities.--If the income tax liability of a

spouse is determined on a separate return, each spouse's tax

liabilities under this subpart shall be separate.

(b) Joint liabilities.--If the income tax liabilities of

each spouse are determined on a joint return, the spouses' tax

liabilities under this subpart shall be joint and several.

(1) Subject to paragraph (2), if either spouse is a

resident and the other is a nonresident, the spouses shall

file separate returns under this subpart on a single form or

separate forms as required by the department, in which event

the spouses' tax liabilities under this subpart shall be

separate, except as provided in subsection (d).

(2) Notwithstanding paragraph (1), spouses may determine

their joint taxable income as if both were residents, in

which event the spouses' tax liabilities under this subpart

shall be joint and several.

(d) Excess credited to spouse.--

(1) Subject to paragraph (2), if spouses file separate

tax returns under this subpart on a single form under

subsection (a) or (c), the following shall apply:

(i) If the sum of the payments by either spouse,

including withheld and estimated taxes, exceeds the

amount of the tax for which the spouse is separately

liable, the excess may be applied by the department to

the credit of the other spouse if the sum of the payments

by the other spouse, including withheld and estimated

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taxes, is less than the amount of the tax for which the

other spouse is separately liable.

(ii) If the sum of the payments made by both spouses

with respect to the taxes for which the spouses are

separately liable, including withheld and estimated

taxes, exceeds the total of the taxes due, a refund of

the excess may be made payable to both spouses or, if

either is deceased, to the survivor spouse.

(2) Paragraph (1) shall not apply if the return of

either spouse includes a demand that an overpayment made by

either spouse shall be applied only on account of the

separate liability.

(e) Return of deceased individual.--Except as provided under

subsections (f) and (g), the final return for a deceased

individual shall be made, signed and filed by the executor,

administrator or other personal representative charged with the

deceased individual's property.

(f) Return of surviving spouse.--

(1) (i) During the year in which a spouse dies, a

surviving spouse may file a return for the year jointly

with the final return of the deceased spouse if the joint

return could have been filed if both spouses were living

for the entire taxable year.

(ii) If a personal representative, executor,

administrator or other fiduciary is appointed on behalf

of the deceased spouse before the deceased spouse's tax

return is filed, the surviving spouse may not file a

joint return without the consent of the fiduciary.

(iii) If a joint return is filed, both the fiduciary

of the deceased spouse's estate and the surviving spouse

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must sign the joint return.

(2) (i) A surviving spouse may make, sign and file the

final tax return of the deceased spouse if the deceased

spouse did not previously file a return for that taxable

year and if a personal representative, executor or

administrator has not been appointed by the time the

return is made, signed and filed.

(ii) If the surviving spouse properly files a final

return for the deceased spouse under this paragraph, a

fiduciary who is later appointed for the deceased spouse

may supersede the final return filed by the surviving

spouse by filing a separate return for the deceased

spouse.

(iii) A joint return improperly filed by the

surviving spouse or superseded by the fiduciary shall be

treated as void.

(iv) If the surviving spouse files a return jointly

with the deceased spouse's return under this paragraph

and the return is superseded by the filing of a return by

the deceased spouse's fiduciary, the surviving spouse

shall be required to file a separate return within 90

days of the filing of the fiduciary's return.

(v) The surviving spouse's separate return shall be

deemed to be filed on:

(A) the day the joint return was filed if the

joint return is filed on time; or

(B) the date the department receives it.

(g) Joint return for deceased spouses.--

(1) If both taxpayers die during the same tax year, a

final return for each deceased spouse may be jointly filed if

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a joint return could have been filed had both spouses lived

for the entire taxable year and with the consent of the

personal representatives, executors or administrators of both

deceased spouses under subsection (f) by the due date,

including extensions, of the joint tax return.

(2) Both fiduciaries must sign the joint return under

paragraph (1).

(h) Individual unable to complete return.--The return for an

individual who is unable to make a return by reason of age or

disability shall be made and filed by a guardian, committee,

fiduciary or other person charged with the care of the

individual and the individual's property or by a duly authorized

agent.

(i) Estates and trusts.--The return for an estate or trust

shall be made and filed by the fiduciary. If two or more

fiduciaries are acting jointly, the return may be made by any

one of them. If the executor of the estate and trustee of the

trust make an election under section 645 of the Internal Revenue

Code of 1986, as amended, to treat the income of the trust as

part of the estate, the fiduciary may make and file a joint tax

return for the estate and trust under this subsection for the

taxable years when the trust income is reported as part of the

estate income in accordance with section 645 of the Internal

Revenue Code of 1986, as amended. If the income tax liabilities

of the estate and trust are filed on a joint tax return under

this subsection, the tax liabilities of the estate and trust

shall be joint and several. The provisions of subsection (d)

shall be applicable to a joint tax return filed under this

subsection.

§ 2704. Time and place for filing returns and paying tax.

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(a) Payment.--A person required to make and file a return

under this subpart shall, without assessment, notice or demand,

pay a tax due to the department on or before the date fixed for

filing the return, as determined without regard to an extension

of time for filing the return.

(b) Place and documents for filing.--The department shall

prescribe by regulation the following:

(1) The place for filing a return.

(2) Forms for returns, declarations, statements or other

documents required under this subpart.

(3) Payment of a tax.

§ 2704.1. Electronic payment.

A payment in the amount of $15,000 or more remitted to the

department for the tax imposed under this subpart shall be

remitted electronically as prescribed by the department. This

section shall not apply to employer withholding payments under

Chapter 25 (relating to withholding of tax) and section 9 of the

Fiscal Code.

§ 2705. Signing of returns and other documents.

(a) Return to be signed.--A return other than an estimated

return under section 2602 (relating to declarations of estimated

tax), statement or other document required to be made under this

subpart shall be signed in accordance with regulations or

instructions prescribed by the department.

(b) Partnerships.--A return, statement or other document

required of a partnership shall be signed by one or more

partners. The fact that a partner's name is signed to a return,

statement or other document shall be prima facie evidence for

all purposes that the partner is authorized to sign on behalf of

the partnership.

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document.--The making or filing of a return, declaration,

statement or other document or copy of a return, declaration,

statement or other document required to be made or filed under

this subpart shall constitute a certification by the person

making or filing the return, declaration, statement or other

document or copy of a return, declaration, statement or other

document that the statements contained in the return,

declaration, statement or other document are true and that a

copy filed is a true copy.

§ 2706. Extension of time.

(a) Authorization.--The department may, upon application,

grant a reasonable extension of time for filing a return,

declaration, statement, or other document required under this

subpart on terms and conditions as the department may require.

(b) Limitation.--Except for a taxpayer who is outside the

United States, an extension for filing a return, declaration,

statement or other document shall not exceed six months.

§ 2707. Requirements concerning returns, notices, records and

statements.

(a) Regulations.--

(1) The department may prescribe by regulation for the

following:

(i) The keeping of records.

(ii) The content and form of returns, declarations,

statements and other documents.

(iii) The filing of copies of Federal income tax

returns and determinations.

(2) The department may require a person, by regulation

or notice served upon the person, to make returns, render

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statements or keep records as the department deems sufficient

to show whether or not the person is liable for tax under

this subpart.

(b) Identifying information.--

(1) When required by regulation prescribed by the

department:

(i) A person required under this subpart to make a

return, declaration, statement or other document shall

include in the return, declaration, statement or other

document an identifying number as may be prescribed for

securing proper identification of the person.

(ii) A person with respect to whom a return,

declaration, statement or other document is required

under this subpart to make a return, declaration,

statement or other document with respect to another

person shall request from the other person, and shall

include in a return, declaration, statement or other

document, an identifying number as may be prescribed for

securing proper identification of the other person.

(2) For purposes of this section, the department may

require information necessary to assign an identifying number

to a person.

(1) (i) Each partnership, estate or trust having a

resident partner or resident beneficiary or each

partnership, estate or trust having income derived from

sources within this Commonwealth shall make a return for

the taxable year setting forth all items of income, loss

and deduction and other pertinent information as the

department may require.

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(ii) The return shall be filed on or before the 15th

day of the fourth month following the close of each

taxable year.

(iii) For purposes of this subsection, "taxable

year" means the year or period which would be a taxable

year of the partnership if the partnership is subject to

tax under this subpart.

(2) Each partnership, estate or trust required to file a

return under paragraph (1) shall also file with the

department a true copy of the income tax return filed with

the Federal Government at the time the return required under

paragraph (1) is filed.

(3) Each partnership, estate or trust required to file a

return under paragraph (1) for any taxable year shall, on or

before the day the return is filed, furnish to each partner

or nominee for another person or to each beneficiary to whom

the income or gains of the estate or trust is taxable a

written statement of the partner's pro rata share of each

item on the partnership return or the beneficiary's pro rata

share of income on the estate or trust return in a form

required by the department.

(4) (i) A partnership required to file a return under

paragraph (1) for a taxable year shall, on or before the

day the return is filed, furnish to each partner

classified as a corporation, partnership or disregarded

entity for Federal income tax purposes a copy of the

Pennsylvania income tax form reporting corporate partner

apportioned business income or loss.

(ii) A reporting partnership shall not be required

to provide a partner who is either a partnership or

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disregarded entity a copy of the form if the reporting

partnership is able to determine that an entity

classified as a corporation for Federal income tax

purposes is not an indirect owner of the reporting

partnership.

(d) Returns of information.--

(1) The department may prescribe regulations requiring

returns of information to be made and filed on or before

February 28 of each year as to the payment or credit in any

calendar year of amounts of $10 or more to a taxpayer.

(2) Returns may be required of:

(i) A person, including a lessee or mortgagor of

real or personal property, a fiduciary and an employer.

(ii) All officers and employees of this

Commonwealth.

(iii) A municipal corporation or political

subdivision of this Commonwealth having the control,

receipt, custody, disposal or payment of interest, rents,

salaries, wages, premiums, annuities, compensations,

remunerations, emoluments or other fixed or determinable

gains, profits or income, except interest coupons payable

to bearer.

(3) A duplicate of the statement of tax withheld on

compensation required to be furnished by an employer to an

employee shall constitute the return of information required

to be made under this section with respect to compensation.

(e) Gambling and lottery winnings.--A person who is required

to make a form W-2G return to the United States Secretary of the

Treasury in regard to taxable gambling or lottery winnings from

sources within this Commonwealth shall file a copy of the form

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with the department by March 1 of each year or, if filed

electronically, by March 31 of each year.

(f) Form 1099-MISC.--

(1) A person shall file a copy of form 1099-MISC with

the department and send a copy of the form to a payee by

March 1 of each year or, if filed electronically, by March 31

of each year if the person:

(i) makes payments of Pennsylvania source income

that fall within any of the classes of income enumerated

in section 2203(a) (relating to classes of income);

(ii) makes payments to an individual, an entity

treated as a partnership for tax purposes or a single

member limited liability company; and

(iii) is required to make a form 1099-MISC or 1099-

NEC return to the United States Secretary of the Treasury

with respect to the payments.

(2) If the form 1099-MISC or 1099-NEC filed by a payor

with the United States Secretary of the Treasury does not

include the State income and State tax withheld as required

under section 2503 (relating to withholding tax requirement

for nonemployer payors), the payor shall update the copies of

form 1099-MISC or 1099-NEC to be provided under this section

to reflect the information prior to filing the form 1099-MISC

with the department and sending the form 1099-MISC to the

payee.

(3) If the payor is required to perform electronic

filing for Pennsylvania employer withholding purposes, the

form 1099-MISC or 1099-NEC shall be filed electronically with

the department.

(4) As used in this subsection, the following words and

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phrases shall have the meanings given to them in this

paragraph unless the context clearly indicates otherwise:

"Payee." The person receiving the payments subject to

withholding under this subsection.

"Payments." The term does not include a partner or

shareholder's distributive share of income from a partnership

or Pennsylvania S corporation.

"Payor." The person required to withhold under this

subsection.

(g) List of partners, members, beneficiaries or

shareholders.--

(1) (i) Each estate, trust, Pennsylvania S corporation

or partnership, other than a publicly traded partnership,

shall maintain at the end of the entity's taxable year an

accurate list of partners, members, beneficiaries and

shareholders.

(ii) The list shall include the name, current

address and tax identification number of all existing

partners, members, beneficiaries and shareholders and of

all partners, members, beneficiaries and shareholders who

were admitted or who withdrew during the taxable year,

including the date of admittance or withdrawal.

(2) If the entity under paragraph (1) does not maintain

an accurate list as required, the tax, penalty and interest

with respect to the entity shall be considered the tax,

penalty and interest of the partnership, estate, trust or

Pennsylvania S corporation and of the general partner, tax

matters partner, corporate officer or trustee.

§ 2708. Timely mailing treated as timely filing and payment.

(a) Timely mailing.--Notwithstanding the provisions of any

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State tax law, when a report or payment of all or a portion of a

State tax is required by law to be received by the department or

other agency of the Commonwealth on or before a day certain, the

taxpayer shall be deemed to have complied with the law if the

letter transmitting the report or payment of the tax received by

the department is postmarked by the United States Postal Service

on or prior to the final day on which the payment is due.

(b) Receipt as evidence.--For the purposes of this subpart,

presentation of a receipt indicating that the report or payment

was mailed by registered or certified mail on or before the due

date shall be evidence of timely filing and payment.

§ 2709. Procedure for claiming special tax provisions.

The following procedures shall be employed for claiming

special tax provisions:

(1) A claimant may claim the special tax provisions upon

the expiration of the taxable year in which the claimant

filed an annual return under this subpart. Notwithstanding

any other provisions of this subpart, the department shall

promulgate rules or regulations as it deems necessary to

implement the provisions of this section.

(2) If a claimant receives income as defined in this

subpart, other than compensation from an employer, the

claimant may claim the special tax provisions in connection

with the filing of estimated tax returns.

§ 2710. Proof of eligibility.

(a) Establishment of eligibility procedures.--The department

shall establish rules, regulations, schedules and other

procedures necessary for the submission and establishment of

proof of eligibility of persons for special tax provisions or

other matters relating to the provisions of this subpart.

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(b) Procedures.--Procedures may include the submission of

requisite information and certifications upon forms provided by

the department, including special tax return or report forms as

necessary.

§ 2711. Paid tax return preparers and required information on

personal income tax returns.

(a) Signature and tax identification number.--For taxable

years beginning on or after January 1, 2020, a personal income

tax return prepared by a paid tax return preparer shall be

signed by the paid tax return preparer and shall bear the paid

tax return preparer's Internal Revenue Service preparer tax

identification number.

(b) Administrative penalty.--

(1) The department may impose an administrative penalty

of $50 on a paid tax return preparer each time the paid tax

return preparer fails to sign the return or fails to provide

the preparer's tax identification number.

(2) The maximum amount imposed on any individual paid

tax return preparer under paragraph (1) shall not exceed

$25,000 per paid tax return preparer in a calendar year.

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Paid tax return preparer." A person who prepares for

compensation, or employs one or more persons to prepare for

compensation, a personal income tax return required to be filed

under this title. Preparation of a substantial portion of a

personal income tax return shall be treated as if it were the

preparation of the personal income tax return.

CHAPTER 28

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PROCEDURE AND ADMINISTRATION

Sec.

2801. Payment on notice and demand.

2802. Assessment.

2803. Jeopardy assessments.

2804. Procedure for reassessment.

2805. Collection of tax.

2806. Collection upon failure to request reassessment, review

or appeal.

2807. Lien for tax.

2808. Refund or credit of overpayment.

2809. Restrictions on refunds.

2810. Limitations on assessment and collection.

2811. Extension of limitation period.

2812. Limitations on refund or credit.

2813. Interest.

2814. Additions, penalties and fees.

2815. Abatement of additions or penalties.

2816. Citation authority.

2817. Crimes.

2818. Rules and regulations.

2819. Examination.

2820. Cooperation with other governmental agencies.

2821. Appropriation for refunds.

§ 2801. Payment on notice and demand.

Upon receipt of notice and demand from the department, the

amount of a tax due under the provisions of this subpart stated

in the notice and demand shall be paid.

§ 2802. Assessment.

(a) Duty of department.--The department shall make the

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inquiries, determinations and assessments of all taxes imposed

by this subpart.

(b) Procedure or time for assessment.--If the procedure or

time for the assessment of a tax is not otherwise provided for,

the department may establish the procedure or time for the

assessment of a tax by regulations.

(1) If a taxpayer fails to file a return required by

this subpart, the department may make an estimated assessment

of the proper amount of tax owed by the taxpayer based on

available information.

(2) A notice of assessment in the estimated amount shall

be sent to the taxpayer.

(3) The tax shall be paid within 90 days after a notice

of the estimated assessment has been mailed to the taxpayer,

unless the taxpayer has filed a petition for reassessment in

the manner prescribed by Article XXVII of the Tax Reform Code

of 1971 within the 90-day period.

(d) Notice.--A notice of assessment issued by the department

under this subpart shall be mailed to the taxpayer. The notice

shall specify the basis of the assessment.

§ 2803. Jeopardy assessments.

(a) Jeopardy assessments, filing and notice.--If the

department believes that the assessment or the collection of a

deficiency will be jeopardized in whole or in part by delay, the

department may mail or issue notice of the department's finding

to the taxpayer, together with a demand for immediate payment of

the tax or the deficiency declared to be in jeopardy, including

interest, penalties and additions.

(b) Closing of taxable year.--The department shall declare

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the taxable period for a taxpayer immediately terminated and

shall cause notice of the finding and declaration to be given to

a taxpayer, together with a demand for immediate payment of the

tax for the taxable period declared terminated and the tax for

the preceding taxable year or as much of the tax as is unpaid if

the department believes that a taxpayer is planning to do any of

the following:

(1) Leave this Commonwealth to escape tax collection

proceedings.

(2) Remove the taxpayer's property from this

Commonwealth to escape tax collection proceedings.

(3) Conceal the taxpayer or the taxpayer's property in

this Commonwealth to escape tax collection proceedings.

(4) Commit any other act which would prejudice or render

ineffectual proceedings to collect the tax for the current or

previous taxable year unless the proceedings are brought

without delay.

(1) A jeopardy assessment is immediately due and

payable, and proceedings for collection may be commenced

immediately after notice is issued to the taxpayer.

(2) (i) The taxpayer may stay collection and prevent

the jeopardy assessment from becoming final by filing,

within 10 days after the date of the notice of jeopardy

assessment, a petition for reassessment, notwithstanding

the provisions of section 2702 of the Tax Reform Code of

1971.

(ii) The petition shall be accompanied by a bond or

other security in an amount the department deems

necessary.

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(iii) The amount of the bond or security may not

exceed double the amount, including interest, penalties

and additions, of tax for which the stay is desired.

(d) Final jeopardy assessment.--If a petition for

reassessment, accompanied by bond or other security, is not

filed within the 10-day period, the assessment shall become

final.

(e) Hearing on jeopardy assessment.--If a taxpayer requests

a hearing on the petition for reassessment, the department shall

grant the taxpayer or the taxpayer's authorized representative

an oral hearing.

(f) Action on petition for reassessment.--

(1) The department shall consider the petition for

reassessment and notify the taxpayer of the department's

decision.

(2) The department's decision as to the validity of the

jeopardy assessment shall be final unless the taxpayer,

within 90 days after notification of the department's

decision, files a petition for review authorized under

section 2704 of the Tax Reform Code of 1971.

(g) Presumptive evidence of jeopardy.--

(1) In a proceeding brought to enforce payment of taxes

made due and payable under this section, the belief of the

department under subsection (a), whether made after notice to

the taxpayer or not, is presumptive evidence that the

assessment or collection of the tax or the deficiency was in

jeopardy.

(2) A certification by the department of the mailing or

issuing of the notices specified in this section is

presumptive evidence that the notices were mailed or issued.

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§ 2804. Procedure for reassessment.

A taxpayer against whom an assessment is made may petition

the department for a reassessment under Article XXVII of the Tax

Reform Code of 1971.

§ 2805. Collection of tax.

The department shall collect taxes imposed under this subpart

in the manner provided by law for the collection of taxes

imposed by the laws of this Commonwealth.

§ 2806. Collection upon failure to request reassessment, review

or appeal.

(a) Time frames.--The department may collect a tax:

(1) Ninety days after the date a copy of the notice of

assessment was mailed, if no petition for reassessment has

been filed.

(2) Ninety days after the date of mailing of the notice

of the department's action on the reassessment, if no

petition for review has been filed.

(3) Thirty days after the date of mailing of the notice

of the decision of the Board of Finance and Revenue upon a

petition for review or from the expiration of the board's

time for acting upon the petition, if no decision has been

made.

(4) Immediately, in all cases of judicial sales,

receiverships, assignments or bankruptcies.

(b) Administrative remedies to be exhausted.--In a

proceeding for the collection of the tax imposed under this

subpart, the person against whom the assessment was made shall

not be permitted to present a ground of defense that might have

been presented to the department, the Board of Finance and

Revenue or the Commonwealth Court if the person had properly

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pursued the administrative remedies under this subpart.

§ 2807. Lien for tax.

(a) Lien.--

(1) If a person liable to pay a tax neglects or refuses

to pay the tax on the date the tax becomes collectible, the

amount of the tax, together with costs which may accrue in

addition to the tax, shall be a lien in favor of the

Commonwealth against the real and personal property of the

person after the lien has been duly entered and docketed of

record by the prothonotary of the county where the property

is situated.

(2) A prothonotary may not require, as a condition

precedent to the entry of the lien, the payment of costs for

entry and docketing of the lien.

(b) Record and priority of lien.--

(1) The department may transmit to the prothonotaries of

the respective counties certified copies of all liens for

taxes imposed under this subpart.

(2) A prothonotary receiving a lien from the department

shall enter and docket the lien of record in the

prothonotary's office. Each lien shall be indexed in the same

manner as a judgment.

(3) A lien shall have priority to, and be fully paid

before, any other obligation, judgment, claim, lien or estate

paid and satisfied out of the judicial sale of real and

personal property with which the property may subsequently

become charged, or for which the property may subsequently

become liable, subject to mortgage or other liens existing

and duly recorded at the time the tax lien is recorded,

except the cost of sale, the writ upon which the sale is made

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and real estate taxes imposed or assessed upon the property.

(4) A writ of execution may directly issue upon the lien

without the issuance and prosecution to judgment of a writ of

scire facias if, not less than 10 days before issuance of an

execution on the lien, notice of the filing and effect of the

lien is sent by certified mail to the taxpayer at the

taxpayer's last known mailing address.

(5) The lien shall have no effect upon a stock of goods,

wares or merchandise regularly sold or leased in the ordinary

course of business by the person against whom the lien has

been entered, unless a writ of execution has been issued and

a levy made upon the stock of goods, wares and merchandise.

fails to carry out a duty imposed upon the prothonotary by this

section commits a misdemeanor and shall, upon conviction, be

sentenced to pay a fine not exceeding $1,000 and costs of

prosecution or to imprisonment for not more than one year, or

both.

§ 2808. Refund or credit of overpayment.

(a) Overpayment.--In the case of a payment of tax not due

under this subpart, the department may credit the amount of the

overpayment against any liability of the tax imposed by this

subpart to the person who made the overpayment and shall refund

any balance to the person.

(b) Credit regulations.--The department shall prescribe

regulations providing for the crediting against the estimated

tax for a taxable year of the amount determined to be an

overpayment of the tax for a preceding taxable year.

an installment of estimated tax more than the correct amount of

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the installment, the overpayment shall be credited against the

unpaid installments, if any. If the amount paid, whether or not

on the basis of installments, exceeds the amount determined to

be the correct amount of the tax, the overpayment shall be

credited or refunded as provided in subsection (a) or (b).

§ 2809. Restrictions on refunds.

A credit or refund may be made under section 2808 (relating

to refund or credit of overpayment):

(1) By reason of the overpayment of an installment of

estimated tax.

(2) Upon reassessment.

(3) Upon the filing of a final return or amended final

return showing an overpayment of tax.

§ 2810. Limitations on assessment and collection.

(a) Time period for assessment.--The amount of a tax imposed

by this subpart shall be assessed within three years after the

return is filed. For the purposes of this subsection and

subsection (b), a return filed before the last day prescribed

for the filing of the return, or before the last day of an

extension of time for the filing of the return, shall be

considered filed on the last day.

(b) Incorrect income filed.--If a taxpayer omits from income

an amount includable in the person's income in excess of 25% of

the amount of income stated in the return, the tax may be

assessed at any time within six years after the return was

filed.

filed, or if a taxpayer fails to file an amended return when

required, the amount of the tax due may be assessed at any time.

(d) False or fraudulent return.--If a taxpayer files a false

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or fraudulent return with intent to evade the tax imposed by

this subpart, the amount of tax due may be assessed at any time.

(e) Assessment for erroneous credit or refund.--The

department may file an assessment to recover a refund, part of a

refund, credit or part of a credit which was erroneously made or

allowed within three years of the granting of the refund or

credit or within the period in which an assessment or

reassessment could have been filed by the department with

respect to the taxable period for which the refund was granted,

whichever period occurs later.

§ 2811. Extension of limitation period.

(a) Consent for extension.--Notwithstanding section 2810

(relating to limitations on assessment and collection), if a

taxpayer consents in writing to an extension of the time period

for assessment, the amount of tax due may be assessed at any

time within the extended period.

(b) Further extensions.--The extension period may be further

extended by subsequent consents in writing made before the

expiration of the extended period.

§ 2812. Limitations on refund or credit.

An application for refund must be filed with the department

under Article XXVII of the Tax Reform Code of 1971 within the

time limits of section 3003.1 of the Tax Reform Code of 1971.

§ 2813. Interest.

(a) Applicability.--This section shall not apply to a

failure to pay estimated tax.

(b) Interest generally.--

(1) If an amount of tax imposed by Subchapter A of

Chapter 22 (relating to imposition of tax) is not paid on or

before the last date prescribed for payment, interest on the

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amount at the rate established under section 806 of the

Fiscal Code shall be paid for the period from the last date

to the date paid.

(2) The last date prescribed for payment shall be

determined without regard to any extension of time for filing

the return.

to be withheld by an employer and paid to the department under

Subchapter A of Chapter 25 (relating to withholding tax

generally) is not paid by the due date prescribed under section

2509 (relating to payment of taxes withheld), interest on the

amount at the rate established under section 806 of the Fiscal

Code shall be paid from that date for the period of

underpayment.

§ 2814. Additions, penalties and fees.

(a) Addition for failure to file.--

(1) In the case of failure to file a return required

under this subpart on the date prescribed for filing,

determined with regard to any extension of time for filing,

unless it is shown that the failure is due to reasonable

cause and not due to willful neglect, 5% shall be added to

the amount required to be shown as tax on the return if the

failure is for not more than one month, with an additional 5%

for each additional month or fraction of a month during which

the failure continues, not to exceed 25% in the aggregate.

The amount added shall not be less than $5.

(2) The amount of tax required to be shown on the return

shall, for purposes of computing the additions for the first

month, be reduced by the amount of any part of the tax which

is paid on or before the date prescribed for payment of the

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tax and by the amount of a credit against the tax which may

be claimed on the return.

(3) The amount of tax required to be shown on the return

shall, for purposes of computing the addition for any

subsequent month, be reduced by the amount of any part of the

tax which is paid by the beginning of the subsequent month

and by the amount of a credit against the tax which may be

claimed on the return.

(b) Addition for underpayment.--

(1) If an underpayment of a tax imposed by Chapter 22

(relating to taxation generally) is due to negligence or

intentional disregard of rules and regulations, but without

intent to defraud, 5% of the amount of the underpayment shall

be added to the tax.

(2) If an underpayment of a tax imposed by Chapter 22 is

due to negligence or intentional disregard of rules and

regulations, but without intent to defraud, and the taxpayer

omits from income an amount includable in the taxpayer's

income in excess of 25% of the amount of income stated in the

return, 25% of the amount of the underpayment shall be added

to the tax.

required under this subpart to be shown on a return is due to

fraud, 50% of the amount of the underpayment shall be added to

the tax. This amount shall be in lieu of any amount determined

under subsection (b) or (h).

(d) Underpayment of installments.--

(1) (i) If a taxpayer fails to pay all or part of an

installment of estimated tax, the taxpayer shall be

deemed to have made an underpayment of estimated tax.

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(ii) An amount shall be added to the tax for the

taxable year at the rate established under section 806 of

the Fiscal Code for the period of the underpayment but

not beyond the 15th day of the fourth month following the

close of the taxable year.

(iii) The amount of the underpayment shall be the

excess of the amount of the installment which would be

required to be paid if the estimated tax were equal to

90% of the tax, or two-thirds in the case of an

individual described in section 2602(e) (relating to

declarations of estimated tax), shown on the return for

the taxable year or, if no return was filed, of the tax

for the year, over the amount, if any, of the

installments paid on or before the last day prescribed

for payment.

(iv) No underpayment shall be deemed to exist with

respect to an installment otherwise due on or after the

taxpayer's death or, in the case of a decedent's estate

or a trust created by the decedent to receive the residue

of the decedent's estate, for a period of two years after

the decedent's death.

(2) No addition to tax shall be imposed if the total

amount of all payments of estimated tax made on or before the

last date prescribed for the payment of the installment

equals or exceeds the lesser of the following:

(i) The amount required to be paid on or before the

date if the estimated tax were an amount equal to the tax

computed after consideration of the special tax

provisions for poverty at the rates applicable to the

taxable year, but otherwise on the basis of the facts

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shown on the return for, and the law applicable to, the

preceding taxable year.

(ii) An amount equal to 90% of the tax computed, at

the rates applicable to the taxable year, on the basis of

the actual income for the months in the taxable year

ending before the month in which the installment is

required to be paid, or, in the case of a trust or

estate, an amount equal to 90% of the applicable

percentage of the tax for the taxable year as determined

under section 6654(d)(2)(C)(ii) of the Internal Revenue

Code of 1986, as amended, at rates applicable to the

taxable year computed on an annualized basis in

accordance with United States Treasury regulations, based

upon the actual income for the months of the taxable year

ending with the last day of the second preceding month

prior to the month in which the installment is required

to be paid.

(e) Penalties.--

(1) In addition to other penalties provided by law, a

person required to collect, account for and pay over a tax

imposed by this subpart who willfully fails to collect the

tax or truthfully account for and pay over the tax, or

attempts to evade or defeat a tax or the payment of a tax,

shall be liable to a penalty equal to the total amount of the

tax evaded, not collected or not accounted for and paid over.

(2) No penalty shall be imposed under subsection (b),

applicable.

(3) As used in this subsection, the term "person"

includes an officer or employee of a corporation or a member

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or employee of a partnership who, as an officer, employee or

member, has a duty to collect, account for and pay over a tax

imposed by this subpart for which the violation occurs.

(f) Penalties.--

(1) A person required under the provisions of section

2504 (relating to information statement) to furnish a

statement to an employee who willfully furnishes a false or

fraudulent statement, or who willfully fails to furnish a

statement in the manner, at the time and showing the

information required under section 2504 and the regulations

prescribed under section 2504, shall for each failure be

subject to a penalty of $50 for each employee.

(2) A person required to furnish an information return

who furnishes a false or fraudulent return or who fails to

file or provide an information return shall be subject to a

penalty of $250.

(3) Each partnership, estate, trust or Pennsylvania S

corporation required to file a return with the department

under section 2702 (relating to return of Pennsylvania S

corporation) or 2707(c) (relating to requirements concerning

returns, notices, records and statements) who furnishes a

false or fraudulent return or who fails to file the return in

the manner and at the time required under section 2702 or

2707(c) shall, for each failure, be subject to a penalty of

$250.

(4) A person required to file a copy of form 1099-MISC

or 1099-NEC with the department under section 2707(f) who

willfully furnishes a false or fraudulent form or who

willfully fails to file the form in the manner, at the time

and showing the information required under section 2707(f),

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shall for each failure be subject to a penalty of $50.

(5) A person required under section 2707(f) to furnish a

copy of form 1099-MISC or 1099-NEC to a payee who willfully

furnishes a false or fraudulent form or who willfully fails

to furnish a form in the manner, at the time and showing the

information required by section 2707(f), shall for each

failure be subject to a penalty of $50.

(6) A person required to file an annual statement with

the department under section 2526 (relating to annual

withholding statement) who willfully furnishes a false or

fraudulent statement or who willfully fails to file the

statement in the manner, at the time and showing the

information required under section 2526 and the regulations

prescribed under section 2526, shall for each failure be

subject to a penalty of $50.

(7) A person required under the provisions of section

2526 to furnish an annual statement to a lessor who willfully

furnishes a false or fraudulent statement or who willfully

fails to furnish a statement in the manner, at the time and

showing the information required by section 2526 and the

regulations prescribed under section 2526, shall for each

failure be subject to a penalty of $50.

(g) Penalty for underpayment.--

(1) If an amount of tax required to be withheld by an

employer and paid over to the department under section 2509

(relating to payment of taxes withheld) or 2510 (relating to

payment of taxes withheld for nonemployer payors) is not paid

on or before the due date prescribed for filing the quarterly

return under section 2507 (relating to time for filing

withholding returns) or 2508 (relating to time for filing

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payors' returns), determined without regard to an extension

of time for filing, 5% of the amount of the underpayment

shall be added to the tax and paid to the department for each

month or fraction of a month from the due date for the period

from the due date to the date paid.

(2) The underpayment shall, for purposes of computing

the addition for a month, be reduced by the amount of the tax

that is paid by the beginning of that month.

(3) The total of the additions shall not exceed 50% of

the amount of tax required to be shown on the return reduced

by the amount of any part of the tax which is paid by the

return due date and by the amount of any credit against the

tax which may be claimed on the return.

(h) Penalty for incorrect self-assessment.--If an

individual, estate or trust files a return required under

section 2701 (relating to returns and liability) which does not

contain information on which the substantial correctness of the

self-assessment may be judged or which contains information that

on its face indicates that the self-assessment is substantially

incorrect and the self-assessment is due to a position that is

frivolous or a desire which appears on the purported return to

delay or impede the administration of Pennsylvania income tax

laws, the individual, estate or trust shall pay a penalty of

$500. The penalty imposed by this subsection shall be in

addition to any other penalty provided by law.

(i) Penalty for underpayment by partnership, association,

Pennsylvania S corporation or lessee.--

(1) If an amount of tax required to be withheld by a

partnership, association, Pennsylvania S corporation or

lessee and paid over to the department under section 2521

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(relating to general rule) or 2525 (relating to withholding

on income) is not paid on or before the date prescribed, 5%

of the amount of the underpayment shall be added to the tax

and paid to the department for each month or fraction of a

month from the due date, for the period from the due date to

the date paid.

(2) The underpayment shall, for purposes of computing

the addition for any month, be reduced by the amount of any

part of the tax which is paid by the beginning of that month.

(3) The total of the additions shall not exceed 50% of

the amount of the tax.

(j) Penalty for noncompliance.--If a tax payment is made and

the payment does not comply with section 2704.1 (relating to

electronic payment) when required, the taxpayer that is liable

for the tax shall, in addition to any other penalty, interest or

addition provided by law, be liable for a penalty of 3% of the

payment remitted, not to exceed $500.

§ 2815. Abatement of additions or penalties.

Upon the filing of a petition for reassessment or petition

for review by a taxpayer, other than an employer, as provided

under this subpart, the department may waive or abate, in whole

or in part, additions or penalties of $300 or less imposed upon

the taxpayer for a taxable year if the taxpayer has established

that the taxpayer acted in good faith with no negligence or

intent to defraud.

§ 2816. Citation authority.

(a) Penalties.--Notwithstanding any other provision of this

part, a person who does any of the following commits a summary

offense and shall, upon conviction, be subject to the fines and

penalties imposed under section 1335(a) (relating to penalties):

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(1) Does not pay withholding tax, interest or penalties

within 90 days after the due date, and the tax liability due

has not been timely appealed or subject to a duly authorized

deferred payment plan.

(2) Underpays a withholding tax, interest or penalty

within 90 days after the due date, and the tax liability due

has not been timely appealed or subject to a duly authorized

deferred payment plan.

(3) Fails to file a tax withholding return, report or

other reporting document within 90 days after the due date of

the applicable payment or return, report or other reporting

document.

(b) Additional penalties.--The penalties imposed under this

section shall be in addition to other penalties imposed under

this subpart.

the department to enforce this section. Employees shall exhibit

proof of and be within the scope of the designation when

instituting proceedings as provided under the Pennsylvania Rules

of Criminal Procedure.

§ 2817. Crimes.

(a) Evasion, defeat or nonpayment of tax.--A person who

willfully attempts in any manner to evade or defeat a tax

imposed by this subpart or the payment of a tax, in addition to

other penalties provided by law, commits a misdemeanor and

shall, upon conviction, be sentenced to pay a fine not exceeding

$25,000 or to imprisonment not exceeding two years, or both.

(b) Failure to collect tax.--A person required under this

subpart to collect, account for and pay over a tax imposed by

this subpart who willfully fails to collect or truthfully

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account for and pay over the tax, in addition to other penalties

provided by law, commits a misdemeanor and shall, upon

conviction, be sentenced to pay a fine not exceeding $25,000 or

to imprisonment not exceeding two years, or both.

required under this subpart to pay a tax, make a return, keep

records or supply information who willfully fails to pay the

tax, make the return, keep records or supply information at the

time required by law or regulations, in addition to other

penalties provided by law, commits a misdemeanor and shall, upon

conviction, be sentenced to pay a fine not exceeding $5,000 or

to imprisonment not exceeding two years, or both.

(d) False statements or claims.--A person who willfully

makes and subscribes a return, statement or other document that

is verified by a written declaration to be made under the

penalties of perjury and which the person does not believe to be

true and correct as to every material matter, or willfully aids

or assists in, procures, counsels or advises the preparation or

presentation of a return, affidavit, claim or other document

which is fraudulent or is false as to a material matter, whether

or not the falsity or fraud is with the knowledge or consent of

the person authorized or required to present the return,

affidavit, claim or document, commits a misdemeanor and shall,

upon conviction, be sentenced to pay a fine not exceeding $5,000

or to imprisonment not exceeding two years, or both.

(e) Fraudulent information.--A person who willfully delivers

or discloses to the department a list, return, account,

statement or other document known by the person to be fraudulent

or false as to a material matter commits a misdemeanor and

shall, upon conviction, be sentenced to pay a fine not exceeding

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$5,000 or to imprisonment not exceeding two years, or both.

(f) Disclosure of information.--

(1) It shall be unlawful for an officer, agent or

employee of the Commonwealth to divulge or make known in any

manner not provided by law, except for official purposes, to

any person the amount or source of income, profits, losses,

expenditures or other information disclosed in a return, or

to permit a return or copy of a return or a book containing

an abstract or other information to be seen or examined by a

person except as provided by law.

(2) It shall be unlawful for a person to print or

publish in any manner not provided by law, a return, part of

a return, source of income, profits, losses or expenditures

appearing in a return.

(3) A person who violates paragraph (1) or (2) commits a

misdemeanor and shall, upon conviction, be sentenced to pay a

fine not exceeding $1,000 or to imprisonment not exceeding

one year, or both, together with the costs of prosecution. If

the offender is an officer or employee of the Commonwealth,

the offender shall be dismissed from office or discharged

from employment.

(g) Disclosure of information to court.--

(1) Notwithstanding subsection (f), it shall be lawful

for an officer or employee of the Commonwealth having custody

of returns to produce the returns or evidence of information

contained in the returns in an action or proceeding in any

court on behalf of the department under the provisions of

this subpart to which the department is a party, or on behalf

of a party to an action or proceeding under the provisions of

this subpart when the returns or facts shown are directly

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involved in the action or proceeding where the court requires

the production of and may admit into evidence the returns or

the facts shown by the returns as are pertinent to the action

or proceeding and no more.

(2) Nothing in this section shall be construed to

prohibit any of the following:

(i) The delivery to a taxpayer or the taxpayer's

duly authorized representative of a certified copy of a

return filed in connection with the taxpayer's tax.

(ii) The publication of statistics classified to

prevent the identification of particular returns and the

items of the returns.

(iii) The inspection by the Attorney General or

other legal representatives of the Commonwealth of the

return of a taxpayer who shall bring action to review the

tax based on the return or against whom an action or

proceeding has been instituted for the collection or

recovery of the tax imposed by this subpart.

(iv) The delivery to the Pennsylvania Higher

Education Assistance Agency of a certified copy or

extract of a State income tax return requested by the

agency for use in determining the eligibility of

applicants for State grants, if the executive director of

the agency certifies that the agency has in the agency's

possession a statement signed by the applicant and the

applicant's parent, parents, guardian or guardians

authorizing the agency to obtain a certified copy or

extract of a State income tax return from the director of

the State Income Tax Bureau.

§ 2818. Rules and regulations.

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The department shall enforce the provisions of this subpart

and shall prescribe, adopt, promulgate and enforce rules and

regulations relating to any matter or thing pertaining to the

administration and enforcement of the provisions of this subpart

and the collection of taxes imposed by this subpart.

§ 2819. Examination.

(a) Examination of records.--The department, or an agent

authorized in writing by the department, may examine the books,

papers and records of a taxpayer or supposed taxpayer and

require the production of a copy of the taxpayer's return as

made to and filed with the Federal Government, if one was made

and filed, in order to verify the accuracy of a return made or,

if no return was made, to ascertain and assess the tax imposed

by this subpart.

(b) Taxpayer to provide access.--Each taxpayer or supposed

taxpayer is directed and required to give to the department or

the department's duly authorized agent the means, facilities and

opportunity for examinations and investigations as are provided

and authorized.

person under oath concerning income which was or should have

been returned for taxation, and may compel the production of

books, papers and records and the attendance of all persons,

whether as parties or witnesses, whom the department believes

have knowledge of the income. The procedure for the hearing or

examination shall be the same as that provided by the Fiscal

Code relating to inquisitorial powers of fiscal officers.

§ 2820. Cooperation with other governmental agencies.

(a) Inspection of returns.--

(1) Notwithstanding the provisions of section 2817(f)

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(relating to crimes), the department may:

(i) permit the United States Commissioner of

Internal Revenue, the proper officer of a political

subdivision of this Commonwealth or any other state

imposing tax based upon the incomes of individuals or the

authorized representative of an officer to inspect the

tax returns of a taxpayer; or

(ii) furnish to the officer or the officer's

authorized representative an abstract of the return of

income of a taxpayer or supply to the officer or the

officer's authorized representative information

concerning an item of income contained in a return of a

taxpayer.

(2) (i) Permission shall be granted or information

furnished to an officer or the officer's representative

only if the statutes of the United States or another

state grant substantially similar privileges to the

proper officer of this Commonwealth charged with the

administration of the personal income tax law of this

Commonwealth.

(ii) An officer or authorized agent of a county

imposing a personal property tax shall be furnished the

following information from the returns upon payment to

the department of the cost of collecting and reproducing

the requested information:

(A) The name, address and Social Security number

of the taxpayer.

(B) If the taxpayer has reported dividends or

interest.

(b) Reciprocal agreements.--

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(1) The department may enter into an agreement with the

taxing authorities of a state which imposes a tax on or

measured by income to provide that compensation paid in the

state to residents of this Commonwealth shall be exempt from

the tax.

(2) Compensation paid in this Commonwealth to residents

of another state shall be exempt from Pennsylvania personal

income tax.

(3) The department, in the agreements, may provide for

reciprocal withholding, employer liability, exchange of

information and all other matters relating to cooperation

between the states.

§ 2821. Appropriation for refunds.

As much of the proceeds of the tax imposed by this subpart as

shall be necessary for the payment of refunds, enforcement or

administration under this subpart is appropriated for those

purposes.

CHAPTER 29

MISCELLANEOUS PROVISIONS

Sec.

2901. Constitutional construction.

2902. Saving clause and limitations.

2903. Transfer to Clean Streams Fund.

2904. Applicability.

§ 2901. Constitutional construction.

In addition to the provisions relating to legislative intent

under section 2203(i) (relating to classes of income), if a

word, phrase, clause, sentence, section or provision of this

subpart is for any reason held to be unconstitutional, the

decision of the court shall not affect or impair any of the

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remaining provisions of this subpart. It is declared as the

legislative intent that this subpart would have been adopted had

the unconstitutional word, phrase, clause, sentence, section or

provision of this subpart not been included in this subpart.

§ 2902. Saving clause and limitations.

(a) General rule.--Except as provided in subsection (b),

notwithstanding any other provision of law, including any

provision of the act of August 5, 1932 (Sp.Sess., P.L.45,

No.45), referred to as the Sterling Act, the validity of an

ordinance, part of an ordinance, a resolution or part of a

resolution, including an amendment or supplement to the

ordinance, part of the ordinance, resolution or part of the

resolution enacted before, on or after the effective date of

this section or adopted by a political subdivision of this

Commonwealth for or relating to the imposition, levy or

collection of a tax, shall not be affected or impaired by

anything contained in this subpart.

(b) Exceptions.--

(1) Notwithstanding subsection (a), a rate of tax

imposed by ordinance of a city of the first class under the

Sterling Act on salaries, wages, commissions, compensation or

other income received or to be received for work done or

services performed within the city by persons who are not

legal residents of the city, shall not, except as otherwise

provided in this section, exceed the tax imposition rate of

4.3125% for the tax year 1977 or for any tax year thereafter.

(2) If a city under paragraph (1) by ordinance imposes a

tax rate on residents or nonresidents in excess of the tax

rate under paragraph (1) on the income categories enumerated

in this subpart:

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(i) The provisions of the ordinance imposing the tax

rate increase on income of persons who are legal

residents of the city shall be deemed valid and legally

effective within the meaning and application of

subsection (a).

(ii) The provisions of the ordinance imposing a tax

rate in excess of 4.3125% with respect to persons who are

not legal residents of the city shall be deemed suspended

and without validity to the extent that the tax rate

exceeds the 4.3125% on income of the nonresidents. The

excess tax rate provisions shall remain suspended and

without validity until the date on which the city by

ordinance imposes a rate of tax on income of both legal

residents or nonresidents of the city in excess of the

tax rate imposition of 5.75% per year. In that case, the

General Assembly declares the suspension to be removed

and the tax rate valid as to nonresidents, provided that

the suspension is removed and the rate deemed valid only

to the extent the tax rate imposed on income of the

nonresidents does not exceed 75% of the tax rate imposed

by ordinance per year on the income of legal residents of

the city. It is the intention of the General Assembly by

this subsection to impose certain terms and conditions

with respect to the validity and legal effectiveness of

the Sterling Act or an ordinance of the city of the first

class enacted under the Sterling Act which imposes a tax

on the income of nonresidents of the city.

(3) Notwithstanding the suspension provisions under this

section, each city of the first class which imposes a tax

under the Sterling Act shall by ordinance direct every

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employer maintaining an office or transacting business within

the city and making payment of compensation to a resident

individual or nonresident individual taxpayer performing

services on behalf of the employer within the city to deduct

and withhold from the compensation for each payroll period a

tax computed in a manner as to result, so far as practicable,

in withholding from the employee's compensation during each

calendar year an amount substantially equivalent to the tax

reasonably estimated to be due for that year with respect to

the compensation. The method of determining the amount to be

withheld shall be to withhold the highest amount of tax

imposed with provision in the ordinance to provide refunds of

the excess tax withheld to qualified nonresident taxpayers

within four months of the end of each calendar year.

(4) If all or part of the provisions of subsection (b)

are declared by a court to be unconstitutional, it shall be

the duty of the court to construe the remaining provisions of

this subpart in accordance with section 2901 (relating to

constitutional construction).

(1) Each employer having a place of business within this

Commonwealth who employs one or more persons who are

residents of a city of the first class shall:

(i) within 30 days after becoming such an employer,

first class the employer's name and address and other

information as the revenue commissioner may require; and

(ii) at the time of payment to the employee, deduct

from the salary, wages, commissions or compensation due

the employee the tax imposed by the city of the first

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class on any salary, wage, commission or other

compensation due the employee.

(2) An employer required to withhold taxes under this

subsection shall calculate the amount of salary, wages,

commissions and compensation of each employee as determined

under the classes of income under section 2203 (relating to

classes of income).

(3) Each employer employing one or more persons who are

residents of a city of the first class who pay a tax imposed

under this subpart shall file a return and pay to the revenue

commissioner the amount of taxes deducted as provided under

paragraph (2). The following shall apply:

(i) The return shall be on a form furnished by the

revenue commissioner.

(ii) The return shall specify the following:

(A) The names and residences of each employee of

that employer during all or any part of the period

covered by the return.

(B) The amounts of salaries, wages, commissions

or other compensation earned during the period by

each employee.

commissioner may require.

(4) The employer shall remit the return and the total

tax deducted in accordance with time frames established under

section 2509 (relating to payment of taxes withheld).

(5) Annually, on or before the 28th day of February,

each employer who has filed returns of tax withheld and

remitted the tax through the year shall be required to file

an Employer's Annual Reconciliation of Wage Tax Withheld,

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along with a copy of Form W-2 of the Internal Revenue Service

for each employee, other listings or electronic data

processing tapes, setting forth the following information:

(i) The name and address of the employer.

(ii) The employer's Federal identification number.

(iii) The full name and residence address of each

employee.

(iv) The employee's Social Security number.

(v) The total wages paid during the year before any

deductions.

(vi) The employer's city account number.

(6) Employers or their designated agents required to

file with the revenue commissioner under this subsection

shall not be required by the revenue commissioner to be

bonded. Employer liability for taxes withheld under this

subsection shall be the same as provided in sections 2511

(relating to liability for withheld taxes) and 2513 (relating

to failure to withhold).

(7) If an employer fails to deduct and withhold tax as

prescribed in this subsection, it shall not relieve the

employee from payment of the tax where payment cannot, for

any reason, be obtained from the employer.

§ 2903. Transfer to Clean Streams Fund.

No later than August 1, 2024, and each August 1 thereafter,

the sum of $50,000,000 shall be transferred from the proceeds of

the tax imposed under this subpart to the Clean Streams Fund

established under section 1712-A.2 of the Fiscal Code.

§ 2904. Applicability.

(a) General rule.--The tax under this subpart shall first

apply and be imposed upon income received by or accrued to a

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taxpayer on and after June 1, 1971.

(b) Exception.--A taxpayer who filed returns on the basis of

a fiscal year or who is the beneficiary of an estate or trust or

member of a partnership which files its returns under this

subpart on the basis of a fiscal year shall be subject to tax

for the first taxable period on the portion of the fiscal year

or of the fiscal year of the estate, trust or partnership which

postdates May 31, 1971, as prescribed by the department by

regulations.

additions, penalties and fees), which provides for additions or

penalties to the tax, shall not take effect until March 20,

1972.

Section 3. Repeals are as follows:

(1) The General Assembly declares that the repeals under

paragraph (2) are necessary to effectuate the addition of 53

Pa.C.S. Ch. 90.

(2) The following are repealed:

(i) Section 1730-E(a) and (b) of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code.

(ii) Section 3171-B(a)(4)(ii) and (iii) and (b)(2)

of the act of July 28, 1953 (P.L.723, No.230), known as

the Second Class County Code.

(iii) Chapter 13 of the act of June 27, 2006 (1st

Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief

Act.

(3) The General Assembly declares that the repeal under

paragraph (4) is necessary to effectuate the addition of 53

Pa.C.S. Ch. 90A Subch. F.

(4) Section 688 of the act of March 10, 1949 (P.L.30,

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No.14), known as the Public School Code of 1949, is repealed.

(5) The General Assembly declares that the repeal under

paragraph (6) is necessary to effectuate the addition of 72

Pa.C.S. Pt. II Subpt. A.

(6) Article II of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, is repealed.

(7) The General Assembly declares that the repeal under

paragraph (8) is necessary to effectuate the addition of 72

Pa.C.S. Pt. II Subpt. B.

(8) Article III of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, is repealed.

(9) The following acts and parts of acts are repealed

insofar as they are inconsistent with this act:

(i) Except as provided under paragraph (4), any

provision of the act of March 10, 1949 (P.L.30, No.14),

known as the Public School Code of 1949, and of any other

law relating to the authority of a school district to

levy, assess and collect a tax on real property and the

power of a city of the first class to levy, assess and

collect a tax on real property.

(ii) Any provision of the act of August 9, 1963

(P.L.643, No.341), known as the First Class City Public

Education Home Rule Act, and any home rule school

district charter adopted under the First Class City

Public Education Home Rule Act.

(iii) Except as provided under paragraph (2)(iii),

any provision of the act of June 27, 2006 (1st Sp.Sess.,

P.L.1873, No.1), known as the Taxpayer Relief Act.

(10) All acts and parts of acts that are inconsistent

with this act are repealed to the extent of the

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inconsistency.

Section 4. The addition of 72 Pa.C.S. Pt. II Subpt. A is a

continuation of Article II of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971. The following

apply:

(1) Except as otherwise provided in 72 Pa.C.S. Pt. II

Subpt. A, all activities initiated under Article II of the

Tax Reform Code of 1971 shall continue and remain in full

force and effect and may be completed under 72 Pa.C.S. Pt. II

Subpt. A. Orders, regulations, rules and decisions which were

made under Article II of the Tax Reform Code of 1971 and

which are in effect on the effective date of section 3(6) of

this act shall remain in full force and effect until revoked,

vacated or modified under 72 Pa.C.S. Pt. II Subpt. A.

Contracts, obligations and collective bargaining agreements

entered into under Article II of the Tax Reform Code of 1971

are not affected nor impaired by the repeal of Article II of

the Tax Reform Code of 1971.

(2) Except as set forth in paragraph (3), any difference

in language between 72 Pa.C.S. Pt. II Subpt. A and Article II

of the Tax Reform Code of 1971 is intended only to conform to

the style of the Pennsylvania Consolidated Statutes and is

not intended to change or affect the legislative intent,

judicial construction or administration and implementation of

Article II of the Tax Reform Code of 1971.

(3) Paragraph (2) does not apply to the addition of 72

Pa.C.S. § 1358.

Section 5. The addition of 72 Pa.C.S. Pt. II Subpt. B is a

continuation of Article III of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971. The following

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apply:

(1) Except as otherwise provided in 72 Pa.C.S. Pt. II

Subpt. B, all activities initiated under Article III of the

Tax Reform Code of 1971 shall continue and remain in full

force and effect and may be completed under 72 Pa.C.S. Pt. II

Subpt. B. Orders, regulations, rules and decisions which were

made under Article III of the Tax Reform Code of 1971 and

which are in effect on the effective date of section 3(8) of

this act shall remain in full force and effect until revoked,

vacated or modified under 72 Pa.C.S. Pt. II Subpt. B.

Contracts, obligations and collective bargaining agreements

entered into under Article III of the Tax Reform Code of 1971

are not affected nor impaired by the repeal of Article III of

the Tax Reform Code of 1971.

(2) Except as set forth in paragraph (3), any difference

in language between 72 Pa.C.S. Pt. II Subpt. B and Article

III of the Tax Reform Code of 1971 is intended only to

conform to the style of the Pennsylvania Consolidated

Statutes and is not intended to change or affect the

legislative intent, judicial construction or administration

and implementation of Article III of the Tax Reform Code of

1971.

(3) Paragraph (2) does not apply to the following:

(i) The addition of the definition of

"compensation," "poverty income" and "Social Security

substitute pension" under 72 Pa.C.S. § 2102.

(ii) The addition of 72 Pa.C.S. § 2203(a)(1)(i)(F).

Section 6. Repeals are applicable as follows:

(1) The repeals under section 3 of this act, insofar as

they relate to the prohibition on the levy, assessment or

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collection of real property taxes under 53 Pa.C.S. § 9011 by

school districts which use a January to December fiscal year,

shall apply beginning January 1, 2028.

(2) The repeals under section 3 of this act, insofar as

they relate to the prohibition on the levy, assessment or

collection of real property taxes under 53 Pa.C.S. § 9011 by

school districts which use a July to June fiscal year, shall

apply beginning July 1, 2028.

Section 7. This act shall take effect as follows:

(1) The following provisions shall take effect October

1, 2027:

The addition of 72 Pa.C.S. Pt. II.

Section 3(6) and (8) of this act.

(2) Except as provided in paragraph (1)(ii), section 3

of this act shall take effect January 1, 2028.

(3) The remainder of this act shall take effect

immediately.

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